The Price of Energy

Posted by Robert Rapier on January 29, 2010 - 10:41am

The price of energy has a very strong influence on the energy choices governments and individuals make. I sometimes hear people ask "Why are we still building coal-fired power plants?" or "Why don't we replace more petroleum with biomass?" One reason is that biomass is generally more difficult to use from a logistical point of view. Another is that there just isn't enough biomass to meet present energy demands. But a major factor comes down to price.

The price and convenience of energy sources are ultimately the keys to customer acceptance. Homes can be heated with wood, heating oil, natural gas, or electricity. Automobiles can be fueled with gasoline, ethanol, natural gas, diesel, electricity, and a wide variety of more unconventional fuels. If consumers have a choice and the supply is convenient, they will tend toward the cheapest energy source they can get.

(a note: Robert has been asked to contribute articles to Forbes blog, and this article is the first of his posts there.)

Below I have compiled a list of current prices for some of the more common energy options on an energy equivalent basis - the British Thermal Unit (BTU). A BTU is simply the amount of heat energy it takes to raise the temperature of one pound of water by 1 degree Fahrenheit. Everything has been converted into U.S. dollars per million BTU (MMBTU). The sources for the data are listed below. Of course there can be very strong local variations that may change the ordering, but the ordering below is likely consistent across the majority of the U.S.

I have included the cost of electricity, although it is important to note that the efficiency of electric motors is higher than for internal combustion engines. For comparison, I have also included the cost of the federal ethanol tax credit (Volumetric Ethanol Excise Tax Credit), which is $0.45 per gallon of ethanol for 2010.

Energy Prices per Million BTU

Coal - Powder River Basin1 - $0.56

Coal - Northern Appalachia1 - $2.08

Natural gas2 - $5.69

Ethanol tax credit3 - $5.92

Propane4- $13.28

Petroleum5 - $13.43

#2 Heating oil4 - $14.74

Jet fuel4 - $15.48

Diesel4 - $15.59

Wood pellets6 - $17.33

Gasoline4 - $17.81

Corn ethanol7 - $23.46

Electricity8 - $26.31

Cellulosic ethanol from corn cobs9 - $30.92

Observations

The list above illustrates why wood pellets for home heating have not had the same sort of market acceptance as they have in Europe. Wood pellets are much more expensive and generally less convenient to use than natural gas in North America. It isn't difficult then to see why wood pellets have a difficult market in North America. For people with access to natural gas, the lower price and convenience of natural gas is compelling. In Europe, a combination of taxes and supply insecurity has resulted in high natural gas prices, so wood pellets are more competitive there.

The cost of the ethanol subsidy is interesting. Taxpayers presently pay more for the subsidy than natural gas costs. However, if you consider that the subsidy is on a per gallon basis - and a large fraction of that gallon of ethanol is fossil fuel-derived, the subsidy for the renewable component is higher.

For instance, consider an energy output of 1.5 BTUs of ethanol (and by-products) per BTU of fossil fuel input (this is approximately where today's corn ethanol plants operate). In this case the renewable component per gallon is only 1/3rd of a gallon; the rest of the subsidy is essentially subsidizing the fossil fuel inputs. (An energy return of 1.5 indicates that it took 1 BTU of fossil fuel to produce 1.5 BTUs of ethanol; hence the renewable component of the ethanol in that case is 1/3rd). That means that the subsidy on simply the renewable component is actually three times as high - $17.76/MMBTU. Also bear in mind that this is only the subsidy; the consumer then has to pay $23.46/MMBTU for the ethanol itself.

Of course there are many other considerations, and government subsidies can tilt the playing field toward or away from different options. But if you ever wonder why those long railroad cars filled with coal are headed east from Wyoming, or why we tend to heat homes in North America with natural gas or heating oil, now you know.

Very Interesting.
I must have misread TOD commentators who said oil was the most dense form of energy, and that the advantages of oil were so great on a cost basis, compared to any other fuel, that nothing came close.

I must have missed the word "liquid"

so as an absolute fuel source on a cost basis, high quality coal is the best

Good point. What are the environmental costs of using coal for example? Of course the coal companies would be the first to claim that if we factored in those costs their business model would become uneconomical and would therefore hurt our economy. What probably doesn't elude them is the simple fact that they are getting a free ride by exploiting the commons. Why would they voluntarily give up this gravy train. Especially if the can continue to obscure the true costs by providing what they call cheap energy to the consumers. The consumers are buying it for now since they are unawares of the compounding interest they are accruing on their loan from the ecosystem. Unfortunately they will be in for quite a rude surprise when they find out that this loan has a steeply adjustable rate.

Oh yeah, AGW is a hoax perpetrated by those climate scientists who are making more money than any bankers or corporate executives, their year end bonuses make the ones given out on Wall Street look like pocket change. The top ten richest men in the world right now are all climate scientists! Coincidence? I think not. What you don't believe me?

Do we really? Care to back that up? Perhaps if we could look at an in depth cost analysis of the entire production chain for energy produced from coal and solar we might be able to have a more meaningful comparison. Just curious how much do you think a mountaintop ecology is worth to the commons. I can't accept that it would be a zero value.

To be honest I don't have a clue what the true costs are for producing energy from solar but that isn't really the point. The point is we don't have a full cost accounting for coal either and until we do we can't have a meaningful discussion.

The first is an older article by Landrigan, Schechter, Lipton, Fahs and Schwartz published in Environmental Health Perspectives (2002) that estimates the morbidity, mortality and costs of lead poisoning, asthma, cancer, and developmental disability. Several pollutants released from coal plans can contribute to childhood asthma, including PM 2.5 and the secondary production of ozone from the NOx. Likewise, the mercury spewed from coal stacks is a persistent neurotoxin that places 300,000 to 600,000 newborns at risk for developmental disability each year. Neonatal developmental disabilities may include mental retardation, brain damage, or cerebral palsy. Exposure during early childhood can reduce IQ and result in learning disabilities and attention deficit disorders.

And that is just a partial list of the real cost of coal. The cost of coal is not just the aesthetics lost by leveling mountain tops; it is also the real dollar cost of health care. And that of course does not include the tragedy of lower IQs in children from breathing all those pollutants.

Let Australia mine its coal and sell it to you. If they do this freely, which they do, then they are happy.
You then burn that coal in a power station 100 miles away and create electricity for 3p/kWh.

The only other alternative is to scrap the NHS to divert the resources to a green infrastructure.
How many more babies would die without the NHS vs the coal station 100 miles away.

We live in a world with limited resources, it is NOT as simple as to go green or not.
We will need to give something big up in return. As I said in the UK it would be roughly equal to giving up the NHS.

Regardless, the UK must be a pretty depressing country to live in, when all people are just born to treat sick people until they are getting sick too and need treatment themselves before they finally die...

Germany uses about 450GW of energy of which they derive only some 10GW from wind.
So only some 2% of Germany energy is derived from wind farms. Plus they have some of the most expensive electricity in Europe at nearly 20 eurocents. By comparison in the UK it is closer to 12 eurocents.

It makes sense for Germany to subsidise wind farms to have production in Germany so they can then sell expensive uncompetitive wind farms to the British for 5 times what they are really worth.

About 2m people work for the NHS but that is only 6% of the population. Of course indirectly maybe another 1m people work for the NHS producing drugs, research and development all sorts

My general point is simple. Renewables cost more so you need to sacrifice something in return to have a green industry. So what will you sacrifice? In the UK we would need to divert resources from the NHS or divert all the resources from primary/secondary/tertiary education and transport.

Its not good enough to say we want wind farms to replace fossil fuels. Tell us what you will sacrifice to pay for it?

And thanks for your concern but the UK is largely a nice country to live in.

So if the UK had 0.1% of their population working in their profitably exporting wind industry they had still 99.9% of their population to work inefficiently in their tax-dependent banks.

And as far as electricity prices are concerned:

And eventhough Denmark has no nuclear power and exports over 20% of its electricity, it generates 20% less CO2/per capita than Belgium and has 27% lower industrial electricity prices than Belgium it has a 41% higher GDP per capita than Belgium:

Well I would wager that your figures are wrong because they don’t show the full requirements.
Maybe that many work building wind farms but what about the people that make the steel to make the wind farms? What about the people that transport all the materials? The people that mine the coal to make the steel?

If you look at the full breakdown you will find that it will take about 3 million people building and maintaining wind farms in Germany if Germany went 90% wind/solar.

I know I have worked in the steel industry before but what I said was that if Germany went near 100% wind. Ie it built the equivalent of nearly 2,000GW of wind capacity (not your stupid 10GW figure) then it would take roughly 2-3 million people to build and importantly maintain those 1,000,000 wind turbines.

That’s roughly 2 people per big wind turbine. Do you think that is an unreasonable number?

And it isn’t just crude steel, but the workers to mine that iron ore , to transport it, to crush it, to mine the coal required to make the steel, to build and maintain the steel plant to build and maintain the coke ovens, to build and maintain the rolling mills, to build the welding equipment to weld the turbine together, to build and maintain the power lines, to build and maintain the electrical components, the people that do the buying and selling of the turbines, the people who do the surveys for the locations, all sorts of shit. Oh and ofcourse to build and maintain the pumped hydro and all the other things required.

All in your looking at 2-3 million people working to build and maintain a “green” Germany.

You need to find those 2-3m from some other government agency. Healthcare employs about that many so scrap healthcare to build and maintain wind farms!

That’s roughly 2 people per big wind turbine. Do you think that is an unreasonable number?

Apparently this figure of 2 people constantly working to support one wind turbine has been made up by cells out of thin air. Talk about propaganda BS! Cells is the kettle.

Yes, it *IS* unreasonable ! After going operational, one person per 10 to 50 wind turbines seems about right. Climb up inspect and oil them once or twice a year. Fix stuff when it breaks (rarely). Manage them (i.e sell the electricity & cash the cheques, pay the land leases & property taxes).

That’s averaged, it will take a hell of a lot more than 2 people per turbine to make the dam thing. Remember your talking about all the steps from rubble on earth to a full turbine.

Simply put if you have a product divide the price by the average wage and that’s how many people years it took.

If a laptop costs $1000 and the average wage is $50,000 then it takes 1 man week to make a laptop from scratch.
If a house costs $200,000 and the average wage is $50,000 then it takes 4 man years to make a house (remember you also making the bricks, glass, steel etc).

The cost of everything is in one way or another labour. Hence the final price over the average wage will give you a good indication of the man years to make it.

So a single 3GW capacity turbine which costs say about $6,000,000 would have taken over 100 man years to build. That is everything to make it, not just the welder to put it together but EVERYTHING.

Germany needs at least 450GW of power, say 350GW of electricity.
That means 450,000 big 3MW capacity wind turbines.
We already figured out it takes about 100 man years to build one of them. Well to build 450,000 of them would take at least 45 million man years and we haven’t even considered the electrical grid or the pumped hydro or the maintenance of nearly half a million huge turbines.

You lot are crazy if you think it will take anything less than 2 million people working constantly to build/replace/maintain a 90% wind powered Germany.

And again, nobody needs to entirely get rid of fossil fuels in one year, 10 years or even in 50 years. But even if Germany had to: Germany spends over $100 billion per year on oil- and gas-IMPORTS at 2006 price level. That is over $5000 billion in 50 years without increasing fossil fuel prices:http://www.destatis.de/jetspeed/portal/cms/Sites/destatis/Internet/DE/Pr...With $5000 billion one can easily purchase 3500 GW of domestic wind turbines with domestic jobs. That is more than double compared to your 1500 GW:

those things you mention are not free nor cheap. If you don’t want to power it directly with wind farms then you indirectly power it with those things but it still stands that you need a huge workforce.

As for heat pumps you be lucky to get 3-4x in the summer. Most you demand will be in the winter at 2x.
It wont be cheap installing 30 million residential and 10 million commercial heat pumps and servicing the lot.
Plus if they are not used en mass today with cheap fossil fuel electric how do you expect them to work with expensive wind?

Again for electric cars more money more people required and that assuming it is even possible to build mass fleet of electric cars at an affordable price.

Overall Germany will need about 350GWe of wind which will equal about 1,500GW capacity.

It wont be cheap installing 30 million residential and 10 million commercial heat pumps and servicing the lot.

Fact is that heat pumps require less maintenance than fossil fuel heaters and do not require any chimney sweepers. And the fossil fuel heaters currently installed won't last another 50 years and will have to be replaced anyway.

Again for electric cars more money more people required and that assuming it is even possible to build mass fleet of electric cars at an affordable price.

We don't use the cars, aircrafts, locomotives, light bulbs, i-phones, laptops, heating systems etc. from 1960 now and we won't use them in the year 2060 either.

A near impossible figure!

Even if your ludicrous figure were true, it is still far cheaper than what Germany would have to spend on fossil fuel imports in 50 years WITHOUT increasing fossil fuel prices.
Germany spends over $100 billion per year on oil- and gas-IMPORTS alone at 2006 price level. That is over $5000 billion in 50 years WITHOUT increasing fossil fuel prices:With $5000 billion one can easily purchase 3500 GW of domestic wind turbines with domestic jobs. That is more than double compared to your 1500 GW: http://www.destatis.de/jetspeed/portal/cms/Sites/destatis/Internet/DE/Pr...

In the USA we have about 100 million air conditioners in service. >90% of all residences, commercial buildings etc.

Here in Halifax has given detailed reports (on TOD) on the performance of his air-to-air heat pump in Nova Scotia winters. From memory, close to 3 COP even on the coldest nights and winter average around 4.

As best I can tell, the seasonal COP of our older Friedrich falls between 2.8 and 3.0. The Sanyo that serves our lower level is roughly 1.3x more efficient, so its seasonal COP is perhaps closer to 3.8.

The Friedrich was installed in August 2005 and the Sanyo in December 2008. We also installed a small 1.5 kW electric water heater to pre-heat the feed supply to our indirect water heater; for eight months of the year, virtually all of our DHW is now heated electrically and during the winter months I'm guessing it's 2/3rds electric and 1/3rd oil.

Roughly speaking, our annual electrical usage is 12,600 kWh and I'm estimate our space heating portion is no more than 4,000 kWh. The two heat pumps and electric water heater have reduced our fuel oil consumption by some 1,800 litres/year and if we assume 1,600 litres can be attributed to space heating, that works out to be 14,000 kWh of heating demand (at 82% AFUE). If we divide 14,000 kWh (our home's estimated heat demand) by 4,000 kWh (our heat pump portion), that suggests the blended COP is in the order of 3.5. We pay $0.11796 per kWh and a COP of 3.5 effectively drops that to less than 3.4 cents. As of our last fill, we pay 8.65 cents per kWh(e) for oil heat, making the latter 2.5x more expensive.

Note that when we heated with oil, we kept the thermostat at 15°C whereas with the heat pumps it's set at 22°C; if we had maintained the same temperature with oil as we do now, our consumption would have been that much higher. When you take into consideration the additional heat demand due to increased thermal losses, our blended COP should be closer to 4.0.

Well I have not been to Germany in 5 months but when I did go they used fossil fuels for more than electricity.

So unless in those 5 months they have stopped using cars and heating their homes then they use a hell of a lot more power than you suggest.

Germany uses the following

Oil: 2.5 million barrels per day (180GWt)
Gas: 82 billion cubic meters (105GWt)
Coal: 81 million tonnes oil equivalent (105GWt)
Nuclear: 34 million tonne oil equivalent (45GWt)
Hydro: 4.4 million tonne oil equivalent (equivalent to 6GWt)
Wind: 24GW capacity (this is 2008 data). Of course wind capacity is meaningless it is actual energy produced which will be about 20-25% of capacity. So that’s 6GWe or equivalent to about 15GWt.
Solar: 5.5GW capacity, so about 1.5GWe or 4GWt

So out of total consumption of more than 450GWt Germany derives about 25GWt from solar and wind and hydro. Ie about 5% of her consumption. The other 95% comes from fossil fuels!!

And I would guess your 0.1% of the German population may be correct but that is only providing 3-4% of her requirements. If you go 90% renewable it would mean 3% of her population. However only 50% of her population works as old people and children etc don’t work. That means 6% of her working population of 40m required to build and maintain a green powered county. That’s more than 2 million people!

ie she would have to divert the resources and people from her healthcare industry to pay for it!
how many people will opt for wind farms over doctors insuring mothers to be don’t die in labour?

If Germany is your model we can all laugh, not even 10% of her energy is green!

Simply wind power needs to drop in price by two thirds for it to take off on any scale. Right now it is far too expensive.

The government doesn’t provide autos or tourism or restaurants.
You need to scrap a government function.
So that is their healthcare, or their schools plus military plus social security or government pensions, or…

It’s the same argument for organic food.
Why don’t we force people to buy organic food? It is better for them and the environment!
Well simply put most people couldn’t afford it, and that could would have to give something up. It may be giving up restaurants or holidays or whatever.

However they would rather have those things over organic food.
Luckily we don’t live in a communist state with people dictating their values to us like you seem to be doing.

So simple question. Why don’t we force organic food onto everyone? What would be the result of doing so?

Where I live, people buy tons of organic food without government subsidies. We have a whole supermarket chain that has built its business model on this premise. Maybe that's why your whole comment here sounds like gobbledygook to me.

Luckily we don’t live in a communist state with people dictating their values to us like you seem to be doing.

I said nothing to suggest anything like that, troll.

(Don't expect anymore responses, you're not worth any more of my time.)

Cells you are poking a few gorillas here. Reality is a place where many do not want to go.
I for one understand where you are coming from, the only quibble I have is that your assumption of capitalism being a long term answer.

As quite a few have said, we are in a predicament and do not simply have a problem to solve, as the solutions also create problems and lead to further predicaments.
In chess and game theory there is a predicament called a "zugzwang" maybe that is where we are, meaning humanity.

Incorrect definition of capitalism and one alternative is social democracies. You know those poor desperate nations of Sweden, Denmark and Norway with their suffering masses.

Capitalism - an economic system characterized by private or corporate ownership of capital goods, by investments that are determined by private decision, and by prices, production, and the distribution of goods that are determined mainly by competition in a free market

You are wrong, germany most definitely does not derive 10% of her power from renewable.
If you want to prove me wrong, show us the figures for oil/gas/coal/wind/solar.

Don’t show me stupid capacity figures but actual power produced.

Germany uses 450GW of power. you are saying that 45GW is produced from wind/solar/hydro?
You are most definitely wrong (BTW 45GW power would mean about 180GW wind capacity, are you suggesting Germany has 180GW wind capacity a figure more than the world as a whole has?)

And as I have clearly shown it will take around 3 million people to build and maintain a 90% renewable Germany. That’s everyone not just the guy that makes the turbine but the whole thing from bottom to top.

For Germany to produce 10% of her power via wind farms it would need to generate about 45GW of power from wind farms. Because electricity is a higher form of power vs thermal power we can cut that figure in half, ie 50% electrical efficiency.

That would mean Germany would need to produce over 20GWe from its wind farms or have a installed wind capacity of about 80GWc. Germany does NOT have that many wind farms.

Mercury is a neurotoxin more toxic than lead. The single greatest source of mercury toxicity in the average American is from mercury-silver amalgam fillings. Dental offices are not allowed to dispose of pieces of mercury fillings into dental office drains because of concerns about high levels of mercury in sewage and damage to wildlife in estuaries. Dentists were allowed to place mercury fillings in people's mouths where mercury vaporized from the fillings over time and entered the blood stream through the lungs and nasal cavity. In 2008 the FDA warned of health risks from mercury dental fillings. http://www.msnbc.msn.com/id/25139198/

mercury amalgam fillings are not the 'single greatest source of mercury toxicity'. Note that the article quotes dentists as not believing they do any harm as well as not finding any measurable difference in human studies. Only gold fillings that are tapped in can compare with amalgam. there's most likely an anti-bacterial benefit from the noble metals like silver.

i'd guess that coal plants are the number one source of mercury, which manifests itself as mercury poisoning from fish. Coal is a great sponge for things like mercury (think activated charcoal) and burning it releases it into the environment. I think it's crazy that the EPA classifies co2 as something to regulate, but not mercury.

First of all, in a country like England with its NHS, the unaccounted health costs of burning coal, oil and other pollutants are placed directly ONTO the shoulders of the NHS, and the society's funds that drive it. By reducing the health detriments of dirty energy, you are SUPPORTING the NHS, and the health of the society in general.

But beyond that, there is no reason to hold Green Energy and NHS in direct opposition to one another for those precious funds. Where else is England spending her treasure that might be diverted better into Renewables? Did the expenditures of getting boots on the ground in Iraq (also not all that highly valued by the English people, I would add, yet their money was thrown into that mess anyhow..), has this investment given you a decent ROI yet?

As far as whether people 'value' mountaintops.. this is as useful an accounting as those who offer Poll results for the public acceptance of Climate Science. You know as well as I that there is so little useful education available in the Mainstream Media, and that a great majority of families are forced to attend to their daily financial survival, that 'what the people value' mostly amounts to A)Getting through to the next paycheck, and B) The spurious non-issues that corporate "newsmakers" tell them they should be focused on.

Long term investments like Solar and Wind actually pay for themselves entirely, so their cost is ultimately Zero, and if you look beyond the payback stretch, they become a form of INCOME, while burned fuels always have to be refilled, and so will cost more and more down the road, not less and less, like renewables.

If you take your energy gleaned from a renewable source and used the going energy rate as a basis, then after this installation had reached a dollar for dollar payback for what you invested (with or without interest as you prefer), then any production that continues thereafter is Pure Profit, or 'Free Energy'. And there are any number of renewable systems out there that can fairly make the claim that they are producing (or harvesting) power for their owner long after payback has been achieved. As payback or ROI accounting is regularly done, I would say that this is a fair expression.

It would be just as fair to say that you simply would constantly down-grade the Price/KWH for as long as a generating system was running.. so that when your PV finally conked out, it had delivered it's lifetime performance at Xcents/KWH.

Yes they are guesses but they are educated guesses with risks factored in.
If people thought the lifetime cost of wind was cheaper than gas they would build wind without subsidy.
Simply put almost no one believes this and they are definitely not willing to put their money on it.

If people thought the lifetime cost of wind was cheaper than gas they would build wind without subsidy.
Simply put almost no one believes this and they are definitely not willing to put their money on it.

I guess that's why so many wind turbines are going up all over the world. PV too. Because people don't think they will work? LOL! I live well on this technology. I do it without any subsidies. Not one cent. Funny! Someone believed.

You should have checked. Wasn't me. I'm actually against any form of subsidies, including fossil fuels, wars for oil, superfund cleanups, bank bailouts, ff leases, etc. Let our energy sources succeed or fail. Time can sort things out. If we turned all subsidies into carbon/pollutant taxes and environmental impact fees, I would be thrilled. I'm damn tired of subsidising 19th century thinking and breathing the results of other people's bottom line . If people of modest means like me can make the responsible choices then so can society. But no worries. Things always balance out in time.

Yes solar thermal can be done unsubsidised but it isn’t common or widespread.
Plus it’s a low quality form of energy, you cant run your TV on it.

Feed in tariffs ARE a subsidy. Its like you spraying some perfume on a lump of shit and telling us it is no longer a limp of shit but a nice rose. WTF is wrong with you?

A subsidy is forcing someone to do something they would rather not do.
Why are feed in tariffs enforced by government and law if people want them? If they don’t want them then by definition it is a fixed market and a subsidy.

It is absurd to claim that any industry in a communist country is not in some way subsidized by the government. I don't know if an accurate accounting of the investment percentages is possible but since the Chinese government is a partial owner of most industry it then follows that the Chinese government made a significant investment in that power plant. In many countries the electricity systems are 100% government services which are financed by government bonds which are paid off in part by selling the electricity. Where the government is the sole owner of the electrical utility they often sell that power at a loss which means the taxpayers are subsidizing all forms of generation.

I don't know if an accurate accounting of the investment percentages is possible but since the Chinese government is a partial owner of most industry it then follows that the Chinese government made a significant investment in that power plant.

The Chinese solar collectors were mostly installed by home-owners and not by some industry.
And these installations were mostly cost driven:http://www.environmentalgraffiti.com/sciencetech/china-solar-hot-water-c...
A Chinese a solar thermal system is essential cheaper than an electric heater with a high electricity bill. (And btw an electric heater also requires a hot water tank (energy storage system) because nighttime electricity is cheaper).

Labour and capital is a cost. The wind don’t turn itself into electricity and build a grid to take it to your home. People do that and they need paying.

Wind or solar is not free. Currently it doesn’t pay back, ever! Hence why such large subsidies are required.

Even Germany the leader of wind power is reliant for 95% of her energy requirements from oil/coal/gas/nuclear.

If they are so great why isn’t Germany going 20% or 30% or god forbid 90% wind powered?

The simple fact is Germany couldn’t afford to do it.

Instead they are conning countries like the UK to buy German wind farms at 10p/kWh instead of gas at 1p or coal at 1p.

However I do agree government should spend money more wisely. If they did that then they could perhaps afford more costly wind power. however asking government to be efficient with money is like asking a heroin addict to ration his supply so it lasts longer.

I used the NHS as an example because in the UK the figures are almost exactly the same.

And that is where the article falls down. Perhaps that is all Forbes asked for but the result is simple minded and fallacious. The article's implicit assumption is that all BTUs are the same and that energy is energy. This is false. It is like saying that all bushels of grain are the same since a bushel is a bushel. Or that all tons of metal are the same since a ton is a ton. Totally ridiculous.

Some BTUs are renewable some are not. It matters. Some BTUs are in liquid form that can be used by the vehicle infrastructure mandate. It matters. Some BTUs can be sent over power lines at near the speed of light and used for heating in odd places and also to power electrical devices. It matters.

And some BTUs are not readily available. It matters. Should Saudi Arabia burn coal instead of oil because it is cheaper? Should China switch to burning oil because its BTUs are cleaner? Availability matters.

And RR doesn't miss the chance to take another dig at corn ethanol. Where is the analysis of oil subsidies such as the Oil Depletion Allowance? Ethanol has no soil depletion allowance. Or the subsidy in the from of the Strategic Petroleum Reserve? Ethanol has no Strategic Ethanol Reserve. And of course the big oil subsidy of Wars for Oil Security which cost trillions of dollars and thousands of Americans deaths and ruined lives are completely ignored even though oil is the main source of liquid fuel for transport? Instead a renewable form of energy that is only about 10 percent of liquid fuel is attacked . Why?

Supposedly because it uses some fossil fuels in its production. Left out is that that fossil fuel is mostly natural case which is now cheap and abundant. Natural gas is not easily used by the current vehicle structural mandate. There is economic gain to be had in turning corn into ethanol to replace imported oil which requires the export of resources to pay for.

All BTUs are not the same even though they contain the same amount of energy. Characteristics other than energy content matter and can not be ignored. The article may be what the simple minded readers of Forbes and its editors wanted but it sheds no light on the energy situation. It compares different forms of energy which is wrong. The implications of the article are false.

The article's implicit assumption is that all BTUs are the same and that energy is energy. This is false. It is like saying that all bushels of grain are the same since a bushel is a bushel. Or that all tons of metal are the same since a ton is a ton. Totally ridiculous.

If the assumption were not "energy is energy," then "energy is not energy." Brilliant.

I guess we can't compare the sugar content (or the calories) of apples and oranges because oranges are not the same as apples and fructose is not fructose (or calories are not calories). Or we can't compare the water volume of a fire hose versus a garden hose because a garden hose is not like a fire hose and water is not water.

Because you seem not to understand that measures of volume and weight ("bushel" and "ton") are completely different beasts than units of thermal action ("the amount of heat energy it takes to raise the temperature of one pound of water by 1 degree Fahrenheit" --RR), then one must assume you are either confused or being disingenuous.

The article's implicit assumption is that all BTUs are the same and that energy is energy. This is false.

No, it is your assertion that is false. Not only does the article not implicitly assume that, it explicitly states that this is not the case. Try reading for comprehension next time.

I am dashing off to a meeting, and will deal with the rest of your nonsense later if someone else hasn't already. But where your argument has always fallen down is that you like to pretend that no energy is fungible. That lets you pretend that your BTUs are better than those from the other guys. But at the end of the day, why does it make sense for me to take natural gas, convert it into more expensive ethanol, subsidize that and pay a much higher price - when I could just convert my fleets to natural gas? You can't answer that question, so you obfuscate and say stupid things like "Energy is abstract."

There is a difficulty with the energy cost analysis that suggests that prices per btu are static. That is, there is a set of prices today for various energy 'containers' and another set of prices tomorrow, a third set the following day, etc.

The prices are more like flows or dynamics that interact and effect each other. Increases in the cost of diesel fuel effect the price of coal more than the price of nuclear. Diesel fuel runs the mining machines and trains that process the coal, most reactor fuels are now reprocessed weapons- grade fuels purchased from Russia (at least in the US). Diesel costs aren't much of a factor with regards to nuclear fuel but will make coal more expensive.

Uncertainty over deliveries or uncertainties over cost also feed back into costs. Volatility effects price; higher prices kill demand which then leads to more volatility the other way. Since markets price fuels in currencies, the effects of currency fluctuations and currency availability effects prices as much as the availability of a fuel.

Investment dynamics also effect cost. Nuclear plants are very expensive, but many costs are to the taxpayers including fuel costs. Since most USA reactors were built a long time ago, upfront construction expenses have be repaid. What is left are maintenance and decommissioning costs. It is tough to compare infrastructure costs over a long time frame. Wind farms built twenty years ago face maintenance costs. New wind farms with mega- turbines have large upfront costs with long pay- back periods. It is hard to make cost analyses, even between new and old wind- farms because the new equipment is much larger and more expensive to build and install than that made twenty or more years ago. At the same time, the larger units give greater return on each dollar (or other currency unit) of expenditure. Because of better design and materials, they will probably also last longer and require less expensive maintenance.

If - at some point in the future - when oil is relatively scarce and the only available electric power is from a wind turbine, the users will not care so much what it costs. While the probability of this outcome is modest compared to other outcomes, the possibility makes it prudent to invest in more expensive wind and solar power.

What is then included in some of the more expensive energy containers is a probability rent (or bet). A 'bet' on wind is a bet that coal will be legislated or depleted out of business. Since coal cannot make this 'bet' against itself, it is cheaper - the bet itself costs a lot of money! The bet is wind's claim on energy production - or rent - that coal power will disappear, hence wind will gain ascendancy over a large part of coal's market. The prices difference is a kind of 'long shot probability' play on the relative success of the different energy containers over time. Remember, markets are casinos!

Another way to look at it is that once upon a time, adding machines were cheap and computers were expensive. Who buys adding machines, now??? They are cheap, right?

I have another comment somewhere over here where I examine this dynamic from another vantage point, but I'm too lazy to find it ...

I agree.
BTUs of one thing are clearly not BTUs of another thing.
What do I care that the price of coal is $.56 per mmbtuh?
I can't use coal to heat my house, fuel my car or fuel my TV set. I can fuel my car only with gasoline or E10, I use natural gas for heating because they don't let you use coal(except anthracite) for heating(for obvious reasons,see China) and I only use grid electricity to fire up the boob-tube.

One serious problem with this article is that it fails to factor in the cost of CO2 on fossil fuels.
For example, $100 per tCO2 adds $1 per gallon. This raises the wholesale cost of gasoline per mmbtuh to $28.69 per gallon, about what carbon neutral cellulosic ethanol at $30; ($2.3 +$1.0) x 1000000/115000 = $28.69.

OTOH, at $100 per tCO2, the price of natural gas doubles to $11 per mmbtuh making even more as a transport fuel and diesel looks even worse as it makes10% more CO2 than gasoline on burning.

His point is that the price Robert quoted is not going to be the same if he uses coal for those things. If he lives in the US, most likely if he used coal to heat his home, he'd be doing it via electricity.

Because of what it may indicate about energy policy when depletion causes prices to skyrocket. Also, if you are working on developing alternatives to coal and oil - as I am - it is important to understand exactly what you are competing against.

One serious problem with this article is that it fails to factor in the cost of CO2 on fossil fuels.

You didn't understand the article then - despite all my caveats. This is about the price you can go out and acquire various energy types for. That may have little bearing on the societal costs of using that energy.

Because of what it may indicate about energy policy when depletion causes prices to skyrocket. Also, if you are working on developing alternatives to coal and oil - as I am - it is important to understand exactly what you are competing against.

So you believe that $.56 per mmbtu coal is competing with ethanol or oil or electricity?
Totally ridiculous.
The price of fuels is simply not important. Price of uranium metal per kwh is tiny compared to natural gas for electricity but no nuclear power plants have been built for decades and new US coal powered plants are few.

You didn't understand the article then - despite all my caveats.

Or your article on the huge importance of energy pricing missed the fact that energy planning without mentioning the cost of CO2 in fossil fuels is worthless.

However, such a perspective would not be welcomed at industry-friendly Forbes (which is possibly the reason you left it out?)

Really, you might thank me for raising the CO2 issue as it shows that biofuels are comparably prices to fossil fuels once the cost of carbon is included.

Spotty airport connection, and they are about to call my flight. So quickly:

"So you believe that $.56 per mmbtu coal is competing with ethanol or oil or electricity?"

Not what I said, but it is certainly relevant for electricity. Otherwise, we wouldn't use coal for producing electricity. There are other items in the list that are relevant for oil or ethanol.

"The price of fuels is simply not important."

Ludicrous. If not for price, we would produce a lot more renewable energy than we do. Price drives coal usage. Price helps tell you why we use coal and not wood pellets for electricity in the U.S. Price tells you why ethanol must be mandated.

"Or your article on the huge importance of energy pricing missed the fact that energy planning without mentioning the cost of CO2 in fossil fuels is worthless."

For the 4th(?) time, this is about price. When I buy a ton of coal in the U.S., I don't pay a price for the CO2 that will be emitted. I might in the future, but this is about price, not what might happen. Is this really that difficult for you to grasp? Or shall I brace for another round of strawmen and ad homs?

I always look forward to your posts and comments and regard you as a guiding light, even though I may disagree with you on a given point from time to time.

If you are anybody else can comment on the following point and put some numbers on it, taking it from the qualitative to the quantatative even in a very rough fashion, I believe this would contribute a lot to understanding the value of renewables.

My point is this.When a wind turbine or solar cell generates a kilowatt hour, the coal or natural gas is conserved-it is not mined, sold,sold, or burnt.

Now let us suppose that renewables other than hydro get up to say three percent of our electrical consumption sometime soon, which seems very likely to happen.The price of coal and natural gas must be depressed according to well accepted theory-of course the ACTUAL price may be higher, in this case without that three percent of wind and solar it would have been higher still.

So the entire economy, excepting the coal and gas industry , benefits in the form of a defacto subsidy of thier oil and gas purchases courtesy of the wind and solar industry.This is effected both thru lower prices AND lower consumption of the oil and gas.

I strongly suspect that this effect may well more than cover the costs of subsidizing wind and solar but I have not located any numbers and lack the expertise to generate my own.

Any numbers, even rough ones, will be enlightening in the extreme.

I have not considered the effect of electric or hybrid vehicles as they are not yet very common, but in the future thier adoption will also depress oil prices.New hydro should be included but I have no idea what subsidies are in effect for hydro in general.We don't have man good available sites here in the states but a heck of a lot if hydro is getting built in the rest of he world, and energy markets are global, so if anybody is knowledgeable about hydro sibsdies , I would like to read thier comments.

You are wrong, overall subsidies harm an economy and its people.
This has been proven many many many times in many different countries with many different products.

Think of food. The EU subsidises farmers so the EU overproduces food. That over farms the land and means a lot of food is wasted. On top of that the EU then dumps this food onto poor countries whos farms cannot compete which means it keeps those countries poorer.

As for energy. Bar hydro renewable is truly a drop in the ocean. Those countries like german which have invested heavily derive just 3% of their energy from wind/solar. Most other countries are a lot less.

Cells, you sound about as well educated in environmental concerns as the average creationist is in biology-but this is not necessarily your fault.I do have some personal background knowledge of your kind of thinking, having read some books advocating pure and unfettered capitalism.

It's very easy to believe that sort of stuff if you close your mind to any contrary edidence,or have never been exposed to the contrary evidence, as seems to be the case in your case.Don't expect much sympathy here.

It is perfectly obvious to anyone with even a modicum of common sense that a wind farm that will last thirty years before it needs a general overhaul and essentially forever with maintainence must save an enormous amount of coal and natural gas over the years, not to mention the associated pollution resulting from thier combustion.

Now let us suppose the wind farm gets a subsidy of fifty million dollars from Mr. Typical Taxpayer.Now if Mr Typical Consumer saves back the fifty million within a reasonable time due to his urtility not buying fifty million dollars worth of coal or ng, he breaks even.Now it happens that Mr Consumer and Mr. Taxpayer are close enough to one and the same person for purposes of this discussion.

If the sale of oil and coal declines because a local utility in Texas invests heavily in wind, I benefit in Virginia because the price of coal is set by overall consumption, like the price of any other widely traded commodity.I benefit here in Virginia and Johkul benefits in Maine and Alan benefits in New Orleans.Hacland over in England benefits, as does Airdale in Kentucky.

As I said brfore, I lack the expertise and data .to put even rough numbers on the savings but given the fact that the savings in ff consumption world wide resulting from wind power are probably now running into many tons of coal and many cubic feet of ng , the effect on coal prices and natural gas prices must be significant.

And we need to remember that this effect of holding down coal and natural gas prices is continious over the long term, whereas the subsidy for a given wind farm is generally limited to a cartain period of time, such as twenty years.

If you reply and say that you can see the logic of my argument(not mine really except for the moment, it is not original ) I will consider the possibility that you are serious-If you cannot understand this I must conclude that you are a free market fanatic rather than a serious commentator.

A little off topic here but I DO REALIZE how frustrating it is when you try to communicate with some a superstitious idiot or a true believer of any sort-such a a fundamentalist who has read only ONE BOOK, "THE BOOK" as he will express it.

Been there and done that of course, I live daily among such people.

I bring this up to hold up our new friend cell as an example of the dictum that when people no longer believe in God the henceforth believe in Nothing.

They just allow some other intellectual meme to rush in and fill the void,as Cell has done.He is either a very skillfull troll and having a lot of fun or another world class idiot that is totally impervious to any evidence contrary to HS new religion, which is a mangy, highly soiled, and altogether common version of laisse faire capitalism.

I might seem utterly impossible that it could be true but I know at least three very bright (otherwise) college graduates who are in his camp.They are quite literate in many respects but in terms of govt policy, energy, and the environment they switch off thier brains and turn on thier blinking lights.From that point on you might as well try to communicate with a traffic light.

There are unfortunately billions of such people.The way to deal with them is to gradually educate them over a generation or two(it can't be done any faster) and gradually allow them to abandon thier errors in thier own way at thier own pace.Pointing out to them that they are ignorant and superstitious just gets thier backs up and gaurantees that they freeze in place for a few more years.

And the devil you know in the form of say protestant fundamentalism is likelyas not to be a better bet than the one you don't -perhaps National Socialism or Stalin's version of communism.

If people don't organize themselves into groups for thier own ends by means of a religion, they will simply coalesce around some other cultural phenomenon and carry own the eternal game of "Us" and "Them" under a new banner.

I'm not actually trying to support religion but rather to demonstrate that it is a natural cultural occurence and fills a void that cannot be left empty in the mind.You can work with a fundamentalist preacher easier than you can someone like Cell.

He is doing us all a great favor by demonstrating why ideas and action on the societal level are two different things altogether.People like him are alloewd to VOTE. ;)

Why is Germany exporting so many wind farms and importing so much fossil fuel?

Because they realize that they can profit from the technology at the same time they adopt it. Further, if they can promote the acceptance of this technology, they can profit more while driving their costs down. They've run the numbers and understand this transition isn't going to happen overnight, but they also understand it is neccesary. Perhaps they don't share your unbalanced focus on the bottom line, but know that they still have to finance their transition.
"Are the Germans stupid?" No.

A simple question, but really not a very bright one...if you are manufacturing wind turbines, you don't care whether your customer is German or not. Probably, simply as a manufacturer, you don't care if you are German yourself. That wind turbines are manufactured in Germany and sold globally just says that they are probably very good wind turbines.

I'm against subsidies myself, and somewhat related to wind turbines; they was a fairly good industry here in the US producing them at one time. They were going pretty well, supported by a government subsidy, but if I remember right the subsidy expired twice and wasn't renewed right away, basically wreaking havoc on the balance sheets and price structures. The whole industry folded years ago, where it may have done well enough if it hadn't relied on a green energy subsidy - which here is like a political hockey puck.

The missing part of this entire thread to this point is "quality".
BTU=BTU is a "quantity", measurable, and comparable based on BTU content.
The quality or should I say qualities of energy are very different.
Intermittent wind won't run the windmill service trucks, directly unless stored in some other form and then you get into conversion losses. Better to have fossil fuel for that.
You can run a truck on wood-gas and loose a lot of BTU to heating the atmosphere around the truck.

The "qualities" of fuel are missing in RR's paper. He's not ignorant, stupid or disingenuous, he knows this. This was left out to make it simple I assume.
Making, harvesting, and mining "energy" is only part of the total picture.
How you make energy "do things" is the part of the picture that makes "energy" more or less valuable in its usefulness.

I burn wood to heat my house. (Solar) dried wood gives of more heat and causes less issues with my chimney. I have a sunk investment in my soapstone stove, chimney, and stone hearth. I have maintenance costs with cleaning. I have cost associated with maintaining or fueling chainsaws, trailers, tractor, property taxes on my wood lot, etc. Wood lot depletion, yada yada yada

If I burned propane I would have a sunk costs in a furnace, ducting, fans, thermostats, etc. I would have maintenance issues, cleaning adjusting, tank rental, etc. Electricity to run it too.

Propane is far more convenient, works when I'm not home(!), and doesn't have spiders and moss on it.
Ignoring efficiency for the moment...

So which is worth more per BTU? It depends on what you want it to do. Are they the same per BTU - yes and very clearly no.

The "qualities" of fuel are missing in RR's paper. He's not ignorant, stupid or disingenuous, he knows this. This was left out to make it simple I assume.

Well, I tried to indicate that I understand that qualities are different. Quality is hard to quantify, but you can group similar BTUs above to see how they stand. What one should do in that list is look at fungible fuels. As I stated, electricity is a different sort of thing than ethanol or coal. It is in there just to give a feel for where it falls. I would expect - given that electricity is produced from coal - that it will be more expensive per BTU. I would expect that biomass pellets - due to the processing, etc. - will be more expensive than coal.

As I stated, the reason for doing this was that I am trying to develop fuels that compete with coal or oil. I will have to compete with Powder River coal in many cases. So just how much it costs - even if it is 2 or 3 times that once it is delivered - gives me a good idea of the ballpark I need to be in.

I like your research, it does identify those cost decisions that cannot be overlooked, as much as we might like to.
It seemed to me that quality was a missing part amongst other posters that they couldn't quite identify but knew existed.

Quality IS very hard to quantify, quantify for what end use?
Fossil fuel has many aspects that are difficult if not impossible to replicate with any renewable to do the work in society as it is currently structured, especially if one adds current consumption into the formula.

What a truly amazing time period to be alive in, to see the apex. Some people will never grasp where we are, and the problem we face, even though they have been told.
We will have "less" (in an economy built on "more").

When there is demand for wind turbines, people manufacture and sell them. German manufacturers have a good part of the global wind turbine market in part because their government considers manufacturing to be an important economic sector which they support, rather than screw up (as we in the US might do someday as well).

Germany imports fossil fuels the same as every developed country. When you need energy you go out and buy it, generally taking into account both cost and convenience. I'm not particularly pro-wind power, but I don't see the need to hammer on obvious points imagining that everyone has it wrong. Wind power does offset some fossil fuel use, which is good. That it isn't cost effective or consistent enough to offset everything is hardly an issue.

Thanks Ron, I just saw cell's comment and was about to respond, you saved me the trouble.

I have a very difficult time not going off on a rant when I come across this kind of thinking:

To be frank most people don’t care about some mountain top in a county or province they have never heard of and will never see.

While I'm sure there are plenty of people who don't because something that is out of sight is certainly out of mind. It is the epitome of ignorance to assume that which you can't see has no benefit to you or can't harm you.

I wonder how cell would feel about some invisible, tasteless, odorless toxin in his drinking water that some corporation was pumping into his local water supply without his being aware of it. I guess I could honestly say I probably wouldn't care about it. *ROLLS EYES*

Well it’s a fact, that which doesn’t harm us we don’t care about and in effect the cost is zero.

Its how the world works. Your values are different from mine.
Open pit mining might be horrible to you and you put the cost of that eye sore at infinity and would not have it in your world. To you the cost of coal would hence be high.

However to most people they don’t mind and the cost to them is zero.

When you take into account the values of a nation you then have the real cost.
Why does Australia allow coal mining? Simply because its people would rather have coal mining and the jobs/prosperity it brings rather than to not have open pit mines and all the other undesirables.

It is pretty much a fact that the “external” cost of mining coal/oil/gas when looked at logically is zero

Well, Cell also said 'that which doesn't harm us', so he's clearly assuming that these costs that are getting dumped onto NHS and other societal balance sheets are no skin off his back.. or really thinks that the externalities, and the loss of the commons aren't really a cost.

Comforting to let someone just set a price for you, and you get to remain innocent of all the other connections and consequences .. alas! It's the beauty of Colonialism.

You are wrong I am not assuming that it costs nothing to the NHS or loss of live or loss of quality of life.

I am assuming that these things are negligible or that the vast majority of people place a low value on these things. Of course each individual will hold different values but the average is what is important.

For example I don’t like the exhaust from cars in London. It isn’t nice at all. It may even be knocking a year off Londoners lives and it definitely has a cost to the NHS and perhaps even the local economy.

However the alternative of say electric cars would mean the cost of transport for Londoners goes up considerably. Are we willing and more importantly able to pay for this? the answer today is no we are not willing and not able to pay for it. the downside of the crap air is less than the downside and sheer fact we cannot afford it.

It is just the same argument with organic food. I’m sure we would all love to have organic food instead of the normal stuff but frankly most people cant afford it. and some who can would rather have the lower quality food and spend the money on something else.

Non organic food also has a cost to the NHS and life and quality of life. Why don’t we ban all but organic food? Well simply because there would be starving children and families and most people would have to give up something big to be able to afford it.

The same is true for green energy. Sure nice to have but what will we sacrifice in return?
In the UK roughly speaking it would need to be something the size of the NHS.

Cells, since, as of 10:04 EST you've only been a member for 12 hours 34 min., you seem to have no idea about the general tone and long term outlook here (which is, to oversimplify, we're running out of fossil fuel, there are too many of us, alternative fuels are reliant on fossil fuels and not ultimately sustainable, the environmental costs of the western lifestyle are destroying the planet...).

These are big problems with unknown extents and end points. If I wanted to bury my head in the sand and say, "Well, that's it! Nothing can be done! Nosir, can't change it! Why, only a moron would think about a problem like this that's obviously insoluble!" (as you obviously do), I wouldn't come here.

I come here to read about big issues, not the cost of a cab in London and why the average bloke on the street won't stand for paying more for electric cars. We know ours is not the mainstream view. We know BAU is infinitely more attractive than reducing consumption.

That doesn't make it right, however. Our buildings and vehicles have taken hundreds of years to build. Converting to more efficient and cleaner versions of either on a national scale is a job requiring decades, strong political will, and would have to start long before the problem becomes critical. I don't care that these ideas are politically unpalatable to the vast majority; I don't care that they don't fit into your economic scheme. I don't care that they are so frightening to you that you refuse to address them. I do care about what might happen if fuel shortages mean I can't heat my house or that I can't get to work. I do care about the possibility of deflation or economic collapse. I do care about environmental disaster. I hope that the tiny contribution I make here will eventually help these ideas become mainstream.

Whereas you would rather have a large screen TV than health care for your mother (to set up a ridiculous straw man like your NHS/green power cannard.) People and governments make spending decisions every day. I'm sure a great many things (BMW's, Land Rovers, more than 600 sq ft of heated space per person, not to mention those large-screen TV's, come to mind) could go far more easily, and with less political backlash, than Public Health.

Jeeze, I've spent an hour on this... And the editor is probably going to excise the whole Cells vs. OilDrum thread anyway.

Here we have our communist brother, a man who will tell other men how to live and what to think.

Hail comrade Canuckistani

Dictating to people how to live will never work and I am very happy people of your views are limited in number because if you were more numerious we would be north korea within a few decades.

Why don’t you go and make wind/solar cheaper than fossil fuels. That way people will thank you and use them willingly. Don’t force people to take on your values, convince them that your vales are better for them.

Wind/Solar will probably never be cheaper than light, sweet crude oil. That is the problem, and that is why our current way of life is most likely unsustainable. Some can drive EV vehicles, but Lithium isn't exactly as common as copper and will never be cheap. In fact, China has begun limiting the exportation of lithium so unless we want cars that have a 30 mile range using more conventional batteries we'll need to write that off. Hydrogen has serious issues as well, specifically related to platinum in the catalytic converters.

Do you think you'll be driving a vehicle in 20 years? What will it run on? CNG? The problem has never been a market economy, the problem stems from the fact that substitution of oil may not be able to continue the way of life we have become accustomed to.

At the end of the day, we live in a finite world, with finite resources, and infinite growth cannot occur.

We are not after infinite growth however we do like increasing productivity. That doesn’t mean more, that actually means doing the same with LESS.

And the earth for all intents has near infinite resources.

As for oil. It is important but what is far more important is total energy. That is oil plus coal plus natural gas plus hydro plus nuclear plus every other form of energy.

We will still likely be driving fossil fuel cars in 20 years time (maybe indirectly, ie EV powered by a NG fired station).

The great thing about our fossil fuels is that they are both convertible (coal to liquids, gas to liquids) and interchangeable (gas or oil or coal fired stations and nukes. Oil or gas powered cars. gas or oil space heating or even electrical heating powered by nukes or hydro. Etc)

So if we run short of one relative to another we can substitute.
For example if oil gets short we just build more gas cars.
If gas is short we mine more coal and burn less gas in power stations and more coal.

The most important factor is if total fossil fuels are peaking and currently the indication is that both coal and natural gas have a lot of scope to be expanded.

I do care about what might happen if fuel shortages mean I can't heat my house or that I can't get to work. I do care about the possibility of deflation or economic collapse. I do care about environmental disaster. I hope that the tiny contribution I make here will eventually help these ideas become mainstream.

From Cells, in response:

Dictating to people how to live will never work and I am very happy people of your views are limited in number because if you were more numerious we would be north korea within a few decades.

Why don’t you go and make wind/solar cheaper than fossil fuels. That way people will thank you and use them willingly. Don’t force people to take on your values, convince them that your vales are better for them.(emphasis Canuckistani)

I have to have made some kind of mistake... apparently, my intention of helping my ideas become more mainstream, like, so people would do them kind of, like, willingly, is something cells thinks I should do(apparently in my spare time, after I overcome the Laws of Thermodynamics and the Earth's resource limits.) If he thinks I should do it ... there must be something wrong with it... or maybe he doesn't read and comprehend his his own stuff either...hmmm. I'll either spend the rest of the day propagandizing ... or start an environmental commie direct action splinter cell and force my values on the proletariat! If I decide on the latter, all those interested in giving it to the man can meet me at the College and Yonge Street Tim Hortons at 4pm.

... or start an environmental commie direct action splinter cell and force my values on the proletariat! If I decide on the latter, all those interested in giving it to the man can meet me at the College and Yonge Street Tim Hortons at 4pm.

So basically your saying the whole nation of Australia is thick and you know better than their collective (is it 20 million?)?

I take it you also think the same about the USA/UK/Russia/China/Canada and all the other major fossil fuel producers.

So the collective wisdom of a billion people is lesser than yours? Yes…….deluded you be.

People use fossil fuels today because it is more productive than wind/solar. However that might change one day. they don’t use it because they are thick but because it is the most productive source of energy we have today.

In fact solar is so expensive and gives so little in return the biggests buyers are lowing their subsidies substantially. ie germany, france, spain, italy, etc

Wind is slightly better, producing power at 7-10p depending on location but again that’s some 3x as much as coal or gas electricity.

The simple fact is that renewables are more expensive and some are far more expensive.

Cost has many meanings, from what I saw by other feedback to this.

It is my opinion humanity will always persue the lowest 'cost' way to produce energy. The thing is, the costs continue to evolve, as well as our understanding of the costs, and what costs we are willing to accept.

One cost is pollution. One cost is EROEI. Etc, etc.

I like the trend of wind and solar adoption, and hope it continues to slowly become a larger fraction of global power production.

Yes costs do change and I hope wind goes down in price by 80% because then it would boom. Likewise I hope solar drops 90% in cost so it too will be successful.

Plus forget the word cost, replace it with productivity.
Fossil fuels are more productive which is why we use them.
It only takes some 30,000 men/women to work the north sea yet it produces about 500GW of power.
To do the same with wind would require perhaps 3 million men/women.

And you are correct pollution does have a cost to our quality of life. However power stations are very clean especially considering the distance to most towns/cities. Likewise big industries are relatively clean.

I would much rather see something replace cars because we breath the fumes in daily and it probably has a much bigger impact on us than open pit mines or mountain capping or any other fossil fuel related problem.

But again, like organic food, most people couldn’t afford an electric car so we are stuck until they bring the price down.

No I don’t hope the cost of fossil fuels will rise. Just like I don’t hope the cost of food or homes or anything else will rise. Why would I or you want us all to be poorer?

And the price of fossil fuels will not rise by a great deal even once past peak simply because we use so much excess. At double the price (which is still very cheap and a lot cheaper than wind) people will stop wasting so much or using it on things that are not so necessary eg space heating.

In real terms I very much doubt fossil fuels (oil plus coal plus gas averaged) will go past 4p/kWh for any long length of time (ie it might spike for a day or month but not for years). oil is nearly there but gas/coal are about 75% cheaper per unit of energy.

But again, like organic food, most people couldn’t afford an electric car so we are stuck until they bring the price down.

I can buy fresh organic food at my local farmer's market every Saturday, at a price comparable to what the GM/Monsanto produced stuff is selling for at the supermarket. Come to think of it, even Safeway is now carrying lots of organic produce, often at relatively small premiums to the regular stuff (10-30% above factory farmed). Electric cars aside, how is it that organic food necessarily = unaffordable?

Well the vast majority of the country just about gets by living pay check to pay check. Lots of people in fact cant even manage that and get into lots of debt.

Having to pay 100 quid for a weekly shop instead of 60 quid isnt going to help.

In terms of fossil fuel vs renewable the price difference is about 3x or more and remember it isnt just about your electricity or gas bill but all the energy you indirectly use in the country. like transporting your food, building your buildings, maintaining your roads. everything.

The average person in the UK uses 5,000 watts continuously. Or rather the country uses a little more than 300GW and has a population of about 61m. ergo per person that is about 5kW of power.

I'm in the U.S., not UK, so can't speak from direct experience. Nonetheless, isn't "vast majority" rather overstating it? And let's parse "living pay check to pay check" a bit.

Yes, lots of people live way beyond their means in both countries, but that isn't the same thing as everyone being "too poor" to pay a small premium for organic food. People spend too much and live beyond their means, which could easily be remedied by a small change in attitudes and priorities. How much does the average American or Brit spend on booze and gambling each year? Couldn't that be considered "discretionary" spending (if not outright waste)?

The premium for organic food *might* force Joe 6pk to cut back on one of his Monday night football beers, or switch to a cheaper brand. If that much. By the same token, the local wino down the street probably pulls in more $$ from panhandling than the average school teacher in my city. Nonetheless, he always appears "broke".

It starts out with an example of an organic food advocate dying of a heart attack. Then immediately follows up with this gem -- "Organic food is food produced by organic farming, a set of techniques based on anti-scientific beliefs, myths, and superstition". Then some FUD about bacterial contamination. There's really no need to read any further.

I'm a reader that may even agree with their premise, but the tone of the article is a put off. I visited the site in hopes of being edified, not to jump on an organic demonization bandwagon.

The very lack of such assays has not prevented the "organics" movement from making extraordinary claims.

But there are assays, some inconclusive and some favorable for organic. Backyard organic gardeners with refractometers are consistantly showing a big difference in Total Soluble Solids between in what they grow and supermarket produce. Not sure if that's something inherent to organic, or because backyard gardeners get to do stuff not feasible on the scale of a farm. There's clearly a connection with soil fertility and health.

Buy in the UK and much of Europe and I suspect most of America the majority of people are NOT wasteful spenders. Sure there is a small portion of people who drink themselves silly or spend money on stupid things but the majority in Europe and I bet if you where honest in the USA too do not spend money wastefully nor are they overly wasteful.

The majority of people, say 50%, couldn’t afford to eat nearly all organic, another 30% could but would have to give something substantial up (say for example not take a family holiday) the remaining 20% can and some of them do eat mostly organic.

However most cannot.
Its just a simple fact of life.
The same is true for green power today. We couldn’t afford it if we wanted to go 80-90-100% green.
No major nation is more than 10% green (excluding hydro which you cant just build more of, you either have the geography or not). (of course some small countries are mostly green thanks to small population vs large hydro sources and others are so poor they live crap lives and run away from rapists but don’t use fossil fuels but I doubt anyone wants that)

Green energy needs to get cheaper before it is viable on a mass scalel.

Many other people have already commented on this but it can not be true.

My current house has a coal bin and still has the coal shoot with door so shouldn't I go back to coal today?

However many years ago the heating system was converted to natural gas.

On a btu calculation this was a stupid move as NG is 2-10 more costly base on RR's costs. Obviously the real cost of coal is not the btu's but all the incidentals required to use it in situ for the purpose of heating the house. And in that way coal is dead last after all other heating systems today, including wood which is easier to get at price than coal.

His coal figures are incorrect.
The cost of natural gas last year was about 1p/kWh in bulk while the cost of coal was about 0.8p/kWh in bulk.
However you are a retail customer so you would pat 3p/kWh for gas and about 2.5p for coal.
You would clearly use gas as it is more efficient and easier.

A more comparable heating solution per BTU would be propane/natural gas and fuel oil.

Powder River coal is about 20% the price of Appalachain coal. The power plants have installed more sulphur scrubbing capacity to prevent acid rain. China and India coal power plants did not have to scrub the sulphur like the US and more jobs are being created there. China is now the largest consumer of autos in the world.

I especially like the "loan from the ecosystem" meme (which I've also used in the past), since I think it makes sense to a lot of mainstreamers who are more than passingly familiar with mortgages, credit card limits and interest, car loans, etc. Add to that image the fact that they (and all of us) are dumping this enormous debt on future generations, including their kids, and it gets really personal.

(And thanks for reminding me about the money end. Al Gore and Jim Hansen are stopping by later today so we can divide up last week's bales of 100-dollar bills before we go cruising for chicks in our gold-plated Hummers.)

Oh yeah, AGW is a hoax perpetrated by those climate scientists who are making more money than any bankers or corporate executives, their year end bonuses make the ones given out on Wall Street look like pocket change. The top ten richest men in the world right now are all climate scientists! Coincidence? I think not. What you don't believe me?

Well firstly how many power stations are fired by oil these days?
Not many. Most are coal at about 40% and in some countries like the UK we have a lot of gas fired stations operating at 55-60%.

Gas last year cost 0.8 pennies per kWh while coal cost about 0.7 pennies per kWh.
Converted to electricity you get 1.4p/kWh of electricity from a gas fired station and about 1.75p/kWh from a coal station.

Our power stations sold and made a profit selling electricity for sub 3p/kWh

By comparison bulk wind power in the UK when all subsidies are taken into account cost in the region of 9-12p so some 3-400% more expensive.

Your 5 cents for wind power is probably propaganda or doesn’t inc subsidies.

The heat pumps are less popular in the northern states. In subfreezing temperatures the outdoor coil collects frost in the winter; blocking airflow. The unit then switches to use indoor electric heat resistance strips similar to what are used in kitchen toasters. The electric resistance heat is higher in cost.

The minimum HSPF or heating season performance factor for heat pumps sold after January 1st, 2006 is 7.7 (Zone 5) which translates to be a seasonal COP of 2.25; prior to this date, it was 6.8. Halifax, NS is located in Zone 5 and our winters are colder than those of Buffalo, NY. The HSPF ratings on the very best units can reach as high as 12.0, so a seasonal COP of 3.5 is, in fact, possible even in our northern climate. Note, too, these HSPF ratings take into consideration the energy consumed in the supply of backup/auxiliary heat and defrosting.

Definitely not a typo. A heat pump delivers several units of heat for each unit of energy it uses. That is, instead of getting 3400 BTU per KWHr, as you do with baseboard electric heaters, you will get about 10,000.

And Heat pumps can work in cold climates - size them for heating, not for cooling, and you can get significant energy delivered per KWHr.

A heat pump, being a reverse heat engine, decomposes work (electricity) into heat going to the respective high and low temperature reservoirs that would have used to run a heat engine. So the term "efficiency" is misleading.

One source of energy isn't mentioned here: Hemp. Hemp has a higher calorific content than coal and is renewable. Here are some sites that detail the uses and potential of this plant:http://www.hempglobalsolutions.com/http://www.hemcore.co.uk/logs.htm
We may not be able to sustain the exponential economic growth with hemp but neither can we do so with a finite planet.

The researchers noted that growing skeletal muscle in labs — the kind people typically think of as the meat they eat — could help tackle a number of problems:

* Avoiding animal suffering by reducing the farming and killing of livestock.
* Dramatically cutting down on food-borne ailments such as mad cow disease and salmonella or germs such as swine flu, by monitoring the growth of meat in labs.
* Livestock currently take up 70 percent of all agricultural land, corresponding to 30 percent of the world's land surface, according to the Food and Agriculture Organization (FAO) of the United Nations. Labs would presumably require much less space.
* Livestock generate 18 percent of greenhouse gas emissions, more than all of the vehicles on Earth, the FAO added. Since the animals themselves are mostly responsible for these gases, reducing livestock numbers could help alleviate global warming.

We quickly go though our arable land with any biofuel or biomass approach, as far as I can see. Even with the population of the 1800s in the US, there was a big problem with deforestation. We are pretty much using the arable land now. "Waste" needs to returned to the soil, or we have soil degradation problems.

Ah, but you forget that the same crop of hemp can be used for biomass, fiber, meat replacer-grade seed, and greens. I cant think of any other biomass crop that does even half that. If one were to go the biomass track, hemp is certainly the most efficient use of arable land.

Wind: 7-10p/kWh (depends on country and if onshore or offshore)
Solar: 40p/kWh
Gas/coal backup costs for wind/solar are about 1p/kWh

Taking into account power station efficiencies, gas at 55%, coal at 38% the fuel cost of electricity from

Coal electricity = 2.1p/kWh
Gas electricity = 1.8p/kWh

So solar is more than 15x as expensive as fossil fuel electricity.
Wind is about 3x as expensive as fossil fuel electricity.

Generally speaking if a country like the UK wanted to convert to a 90% wind 10% fossil fuel powered country it would need to spend about £110B per year in subsidies. So for the UK it would be a choice of scrapping the NHS and putting all the resources and workers into developing and running the green energy sources.

Im not so sure that the people of the UK would prefer wind power over the NHS

The cost arguments are paramount to a green future. Until the cost is comparable to fossil fuels we will not convert on a large scale.

Since the gist of the article was home heating, obviously PV would be a poor choice (and I'm not sure why it's even being discussed in this context). Solar thermal systems are a very viable option for home heating in many areas.

Sadly, in the UK almost no buildings are constructed properly (some in my village are >600 years old!) so passive solar isn't free at all, and because adequate solar PV is so expensive at our lattitude we likely will have no alternative to using more and more wind - so what does that mean for the NHS (health service)? - or our cars, they run on petrol not electricity?

So solar is more than 15x as expensive as fossil fuel electricity.
Wind is about 3x as expensive as fossil fuel electricity.

>> But in particular your solar and wind claims would be interesting.Cheers.

To Mr Rapier:
Thanks again for an informative and awakening essay. Your energy-digging is never ending, so you probably have some sort of (unregistered) world record in this field. Kudos for helping me understand these matters better..

Yes look at the feed in tariffs for solar in Europe. About 50 euro cents per kWh. just type solar feed in tariff into google news.

Look at the subsidies for wind, I have uk info and we get about 3.5 to 7p/kWh subsidy on top of spot price which is about 3p/kWh. on top of that they get an indirect subsidy of about 1-2p in the form of gas backup.

In total wind electricity in the UK costs (at the grid point) 9.5 to 12p when all costs are factored in.

Slated to eventually consist of four separate units of 1,200 megawatts (MW) each, the planned plant would go a long way to meeting Turkey's expected growth in power demand albeit at a price, that of a guaranteed off-take which will see Turkey's power grid take 100% of the power the plant produces at an agreed fixed price up to 2030. In view of the long-term guarantee, the consortium's bid price of 21.16 euro cents/kilowatt hour (KWh) caused further controversy, being considerably higher than the 4-14c/kWh that private companies currently sell power into Turkey's slowly liberalising power market. That controversy has scarcely been dampened by the consortium's subsequent offer to drop its bid to 15.35c/kWh.

I cant comment on nuclear because I have no experience of it being built in a free market.

However NEW gas and coal is very cheap. A new gas station is built and run at a profit popping out electricity for 3-4p/kWh which is less than 5 euro cents.

In comparison wind in Europe costs once you take into account the direct and indirect subsidies some 9-12p/kWh. So wind is at least 3x as expensive as new coal or new gas.

Now I understand my posts may seem anti renewables. Let me assure you I am not.
I would love wind to be competitive with coal or gas unsubsidised because if it were then we would see a TRUE energy revolution. We would see western countries deriving 30-50% maybe more from wind. Instead the best countries like Germany currently derive less than 3% of primary energy from wind!

Just to add my view on nuclear: personally I’m not pro nuclear but I am a realist. From my calculations I believe a subsidy of 1.0p/kWh of nuclear would make them competitive with gas and coal.
If my assumption is correct it would mean we could build 7x as much nuclear as we could do wind for the same sum of money.

AECL's $26 billion bid was based on the construction of two 1,200-megawatt Advanced Candu Reactors, working out to $10,800 per kilowatt of power capacity.

...

The bid from France's Areva NP also blew past expectations, sources said. Areva's bid came in at $23.6 billion, with two 1,600-megawatt reactors costing $7.8 billion and the rest of the plant costing $15.8 billion. It works out to $7,375 per kilowatt, and was based on a similar cost estimate Areva had submitted for a plant proposed in Maryland.

Well I use real life data and info rather than propaganda filled articles.

Lets take some facts. Again I will use the UK as our example as I know it better than most other nations.

1: bulk electricity into the grid is sold in the uk most of the time for sub 3p/kWh
2: gas fired stations are being built and have been built freely in a relatively free electricity market. (that tells us that a gas station will be producing electricity for sub 3p/kWh and that makes sense as in the UK last year gas cost about 0.7p on average and the gas station will be converting that at 55 to 60% efficient.
3: utilities are salivating at the prospect of building coal fired stations in the UK. Hence that too tells us it can be done profitably for 3p/kWh
4: Most big users will be on fixed contracts which will be lower than average spot.

what we also know:

4: no nukes have been built in the UK in a free market and the companies seem to want guarantees so we cannot accurately price them in the UK. However I suspect a 1p/kWh subsidy for 20 years would entice them enough to be built. That is about 7x less of a subsidy compared to wind. However this is only my calculations and my assumptions so I don’t stand 100% behind this prediction.

5: no one is building wind farms unsubsidised (so they are clearly more costly than coal or gas). Even Germany a lover of wind derives less than 5% of its total power from wind.

6: natural gas and coal may be volatile but they are dirt cheap. Natural gas would have to go to about 6p/kWh and coal to about 4-5p before wind is as competitive as a gas fired station. It is EXTREMELY unlikely natural gas or coal will go up that much. The simple reason is that at those prices lots of demand destruction would happen. People would stop heating their homes and wear more suitable clothing.
So it is highly unlikely fossil fuels will go up to make wind competitive. Wind has to come down in price.

It is EXTREMELY unlikely natural gas or coal will go up that much. The simple reason is that at those prices lots of demand destruction would happen. People would stop heating their homes and wear more suitable clothing.

I apologize for thinking you were a right-wing kook. I now see you are just a doomer.

Proof: US Energy Policy Act of 2005. It gave new nukes the same subsidy as wind PLUS billions more in subsidies PLUS 80% guaranteed gov't financing for 30 to 54 years (thus reducing the cost of capital).

* Authorizes cost-overrun support of up to $2 billion total for up to six new nuclear power plants;

* Authorizes a production tax credit of up to $125 million total per year, estimated at 1.8 US¢/kWh during the first eight years of operation for the first 6.000 MW of capacity; consistent with renewables [same as wind];

* Authorizes loan guarantees of up to 80% of project cost to be repaid within 30 years or 90% of the project's life [60 years];

* Authorizes $2.95 billion for R&D and the building of an advanced hydrogen cogeneration reactor at Idaho National Laboratory;

* Authorizes 'standby support' for new reactor delays that offset the financial impact of delays beyond the industry's control for the first six reactors, including 100% coverage of the first two plants with up to $500 million each and 50% of the cost of delays for plants three through six with up to $350 million each for;...

* Updates tax treatment of decommissioning funds;

* A provision for the U.S. Department of Energy to report in one year on how to dispose of high-level nuclear waste;[MANY billions more in subsidies there dealing with nuke waste. I think UK just blew a few billion quid on a failed attempt to deal with nuke waste]

I would wager that those subsidies are not correct.
Simply put France would not have been able to go 80% nuclear if it cost so much to subsidise.
I have yet to see a major country go 80% wind.

I have no data on nukes built post electricity deregulation so I cant be 100% sure but logically it makes sense that nukes require little or no subsidy. As I said I would cite France, she could not be deriving 80% of her electric from nukes if it cost as much as wind or more in subsidies.

No you quote wikipidia and the mass media both of which are known to be inaccurate and full of propaganda especially when it comes to things like energy.

What I have quoted and stated is real life.

If it cost so much to build and subsidise nuclear then France would be bust and the French would be poor.

EDF is partly owned by the state but if nukes were so costly they would go bankrupt or the government would have to keep injecting cash into it which isnt the case.

No major country has even gone 10% wind power (not electricity but total power) and the reason is that the subsidies are real and very high.

I am not an advocate of nuclear but I suspect most the negativity and figures through around are propaganda and plain wrong.

Come back when a major country is producing more than 50% of its electricity from wind. We know many countries produce 20-30-40-50% of their electricity from nukes. Some even produce 60-70-80% of their electric from nukes.

Bingo. Beyond the very real issue of the well documented costs that coal, especially, and hydrocarbons in general impose on the economy, this is the other matter that lacking-in-brain-cells misses.

Moreover, people with sufficient brains cells for minimally complicated computing will consider the very probable increase in cost for coal and other hydrocarbons as resource accessibility continues to get more difficult and quality continues to decline.

The UK government doesn’t operate a feed in tarrif but one is expected before april this year.
I hope they don’t do it as it is the worst way to encourage renewable energy.

The UK government currently operates something they called the “renewable obligation certificate or ROC for short”.

Its too long to go into here so google it if you interested.

In short utilities have to buy a ROC off the wind generators. So the wind farm sells at spot and sells a ROC for every MWH it generates. Currently the ROC trade for about 3.5p. onshore wind farms get 1ROC and offsore 2 AFAIK.

But on top of this there is an indirect subsidy from the coal/gas stations having to back off. That is in the range of 1.5p by my calculations.

The profit-making wind industry exports 83% of its wind turbines with a profit (as opposed to the tax-payer-dependent UK-banks) is a result of those very effective feed-in-tariffs and is the reason while the UK failed to come up with an exporting wind industry despite having better wind resources than Germany. (And again: ONLY 0.017% of the German population work for the domestic wind power industry.)http://www.wind-energie.de/en/news/article/wind-energy-made-in-germany-i...

A number of years ago I constructed a graph on 1 mm grid paper with $ per 100,000 BTU on the vertical scale and on the horizontal scale I put all of the energy sources cost per purchasing unit. Each of the energy sources wound up as a straight line on the graph, but I found it very interesting to be able to look at the various energy sources at different prices to see which energy sources would be the lowest cost per 100,000 BTU (including lines for the energy sources at 100% utilization and also at realistic utilization - ie 70% for wood pellets and 50% for most cord wood stoves, etc..).
Based upon my chart, for this year, propane is cheaper than wood pellets or corn for home heating. Cord wood purchased by the "pickup load" which I averaged to about 800# per load proved to be the most expensive by a long way. The cheapest home heat proved to be geothermal heatpump by a bunch - even without the special prices where they can shut you off any time they want to. I replaced my aging gas furnace with a geothermal heatpump this last year. If prices for propane stay below the current approximate $1.50 (actual this year contract $1.32 gallon) I will never make back the money I paid for the geo unit. If prices go back to $2.32 gallon like a year ago - or more - the geo unit will pay for itself within my expected lifetime. I gambled that prices are going to rise?
I am really amazed at how little understanding most people have of what the real cost per unit of heat most of their options cost at the varying retail prices per unit of purchase.
It would be nice if they could mandate that all energy has to be sold in $ per hundred thousand or million BTU or metric equivalent. That one change would make a huge difference in how people see "energy costs".

And you need to factor in that the costs of solar thermal are lower than of PV.
There's a reason why China installs over 80% of all the solar collectors in the world and it is not because the Chinese are orders of magnitudes wealthier than the British:http://www.ren21.net/pdf/RE_GSR_2009_Update.pdf

Im not so sure that the people of the UK would prefer wind power over the NHS

So you are saying that pretty much all the people in the UK either work in a hospital or in a bank or sit on a couch and there is nothing else they could possibly do with their life's?
In that case, I'm certainly not surprised that Germany is far more economically successful and exports over 83% of its wind turbines with a profit:http://www.wind-energie.de/en/news/article/wind-energy-made-in-germany-i...

So if you think renewables are cheaper, which they are not, why don’t you go and build them unsubsidised and make a profit?

Why are solar companies crying over the decrease in subsidies announced by Germany /France /Spain?
Hell even after the decrease it is a HUGE subsidy.

Don’t get me wrong I would rather have green power but I am realistic enough to know it ant gona happen until the price is comparable.

About 2 million people work in the UK NHS. The money, people and resources used on the NHS would have to be diverted to build and maintain a green energy infrastructure.

And no the UK economy doesn’t have any spare capacity because if it did they would be utilised. Of course we do misallocate capital and resources but it is easier said than done to use those more efficiently.

Once people fail to deliver facts they come up with insults.
Actually, if you compare new plants with new plants many are. Otherwise renewable options would not be built in places where there is no support whatsoever:http://www.ren21.net/pdf/RE_GSR_2009_Update.pdf

Renewables aren't cost competitive, but that is beside the point for the UK, FF are going away very quickly, we have no choice.

Depletion of our domestic sources will likely be such that we will produce a small fraction of our needs by 2020, maybe less than 10% - Gordon Brown has committed us to ~34% reduction by then, it should be easy, probably nobody sensible will lend us the money to import what we need to live beyond our means, even if due to ELM any is actually available for import.

Great .
Eye-balling the 3 categories of UK fossil fuels production over the last 10 years : All 3 are cut in half. just like that. The blue wedges will afterall (at some stage) taper off and 'curve further into the future'- imposed by nature.

The other nations in EU have almost no raw fossil sources per-capita themselves, but when we read about upcoming energy predicaments for Europe......... well it's always the UK that steals the headlines - the largest and most self sufficient of them all - per definition.
Strange, IMHO, I would assume there must be a lot of EU-countries that are much worse off than the UK, in say 2020. (?)

The blue wedges will afterall (at some stage) taper off and 'curve further into the future'- imposed by nature.

Hmmmm .... Only for coal I expect, the gas and oil are under salt water, a very costly, corrosive, place to be - the structures have a limited profitable life and there isn't a prospect of nodding donkeys slowly pumping oily brine for years and years. For quite a bit of the oil and gas it's likely to be just too costly to extract all the resource like you would on land.

Yes but we have the choice of importing gas for 1p/kWh or importing German wind farms for 10p/kWh

Energy is a global market, it doesn’t matter so much what the production of one country is doing.

Plus the UK is about 70% energy efficient while France is nearly none and Germany is about 30% and Japan is also very low.

The UK is in a good position compared to most western nations.

Its like the argument of organic food VS standard food.
Sure everyone would like the better quality organic food but most people just wouldn’t be able to afford it.
The same is true for renewables vs fossil fuels at todays prices.

And as a scientist I can tell you it is going to be very hard achieving the reductions Europe is talking about past 2020

as a scientist I can tell you it is going to be very hard achieving the reductions Europe is talking about past 2020

No, it will be very easy as there won't be enough exports to go round due to the 'Export Land' effect - what will be difficult to achieve is 'business as usual' growth - without that essential growth our financial system won't/isn't work properly and we as a nation won't be able to borrow money from other nations as growth is required to pay back the debt + interest.

The UK is in a good position compared to most western nations.

So what?

I agree the UK is in a better position than many European countries, but actually we are not in a good position at all, check the UK FF production graphs since ~2000, we have started to import more and more of our primary energy, we have managed to do this by borrowing more and more money from other western nations that are running a surplus, we are living well beyond our collective means and it is not a sustainable policy. We have run a deficit for so long that we are now close to our borrowing limits - in the long run it is impossible to borrow your way to wealth as you have to pay back the debt with interest.

You clearly don't understand how the world works - the UK has done fine because by a stroke of luck we were floating on coal, gas, oil and minerals not because of our laws. The past is not a guide to the future!

Look at Japan, very little domestic energy and minerals yet the worlds second richest nation.

No, you look at Japan, it is the world's second most indebted nation if you look at debt/GDP - number 1 is Zimbabwe! An indebted person is NOT necessarily a wealthy person, but could be living beyond their means.

There is plenty of fresh water in the world but it isn't evenly spread so in some places it is too boggy to grow food and in others it is a desert. Oil is the same and the UK will soon be in a desert for oil - and the rest of the oil exporting world WILL NOT HAVE AN ADEQUATE AMOUNT OF OIL to sell us even if we had an adequate amount of something to exchange for it, which we don't. Our current way of living is not sustainable!

Yes, rule of law is very important in promoting the wealth of a nation, but by itself is not enough and hardly determines 90% of the outcome. The greatest determinants of a decent standard of living would likely be the following (not necessarily in order):

Japan and Russia are perfect examples.
Russia a very land and resource rich country with a poor legal system. It is overall not a very rich country.
Japan, a very poor land/resource country but with a good legal system and free trade. It is overall a very rich country.

You can live ontop of one of the worlds biggest oil reserves but it is worthless if you cant do business or have free and fair trade. Think Iran or Iraq or even Russia. On the other hand you can be extremely resource poor but still be rich if you have fair free trade and a good legal system. Japan, Germany, France come to mind.

Resources are only a small part of a nations wealth as the real world clearly shows us. As long as we keep decent laws and free fair trade we will do fine even with near zero domestic fossil fuels a la france or japan.

Natural resources only don't matter when you can freely and cheaply import them from your neighbors. Once you can't, it's amazing how much they suddenly "matter" (as Japan found out when the U.S. threatened to restrict oil exports, ultimately leading to Pearl Harbor).

Cell let me give another example of a country that fits your criteria for a country poor in resources and a good democratic legal system. That country is Denmark cheap energy has never been the main criterion since they nearly got wiped out in the oil price hike in the early seventies when they were nearly 99% dependent on oil. Your capitalist idea that the market knows best and you always chose the cheapest alternative is what is wiping out my country England and with it Britain. Do you think that Britain will be able to pay for the import of energy when it goes bankrupt. Sometimes subsidy is the best alternative.

Let us take Denmark who have seriously meddled with the capitalist idea of the market and compare it with my country Britain who have slavishly followed it. The Danes have seriously subsidized the renewable market energy saving and energy efficiency and see where it has lead them and how it has benefited. The Danes began by starting a serious project into wind power by erecting different types of windmills in the grounds of the Atomic research institute at Risø near Roskilde. I used to ride past every day on my way too University. They instigated a feed in tariff, in 1978 Vesta erected its first commercial windmill and many other firms were started. They are now I think the second largest producer of windmills in the world and have installed enough capacity to provide electricity for a country the size of Spain. The industry employs over 30,000 people if we had done the same we would have now an industry employing 360,000 people in well paid jobs and not on the Dole most of its production goes in exports which brings in millions for the exchequer. When I was living there during the 70s they got most of there electricity from 12 large generating plants now they get it from more than 200 multi fuel plants mainly with co generation which has brought has brought energy utilization up to nearly 80% the waste heat is pump round the different cities to keep the building warm. Imagine how much that has saved the country in not having to import all that extra fuel for heating building. They aggressively raised building and insulation standards. Rockwool is a Danish multinational firm which has expanded due mainly to supplying the insulation for the higher building standards. Guess where the profits come back too. Gaming the market with subsidies to pay for the heavy front end investment had a cost. These subsidizes have certainly been expensive over the last 30 odd years I have read that it cost the Danish taxpayer approximately 60 kroner a month, but what has it brought them. Because of more energy effieciency there per capita production costs in energy is approximately half of what it is in the U.K. Which means that there industry is more competitive. There balance of payments is much better than what it used to be because it has reduced energy imports and built up an export industry, renewables that is set to grow even faster in the coming years.

Now let us take Britain during the last 30 years and see what has happened to my country. Attila the Hen ( Maggie Thatcher ) destroyed our mining industry, I should bloody well know. Because coal was not competitive or that was her excuse. The pure market theology which you like Maggie subscribe too of let the market decide, has all but destroyed my country with its stupidity. The oil and gas industry was sold off to the highest bidder who exploited it for there own ends, What the country received was spent on bribing the electorate. There is no sovereign wealth fund. The whole lot has been spent. We spent our capital as income. British industry was hollowed out because of the high pound. Now what do we have after 25 years, a manufacturing industry that is not big enough to export enough to pay for our imports, now that the city has gone tits up, and had to be bailed out (subsidized) by the British taxpayer by a promissory note that my grandchildren will be paying off. I could go on but I will leave it here you sir are an idiot and like all market purist know the price of every thing (the market knows best) and the value of nothing. Economics is much more than a simplistic mantra.

Denmark: 6GW gas, 13.5GW oil, 5.5GW coal (and 3.1GW wind capacity equivalent to about 3GW fossil fuels).
Only 11% of demarks power is from wind. The other 89% is from fossil fuels. Mostly oil then gas then coal.
Is that a surprise to you? Perhaps you need to revaluate your divine view of Denmark?

And guess what? Overall demark per person uses MORE energy than the UK by about 5%.

Now have you ever asked yourself why demark might be relatively affluent? Might it have anything to do with fossil fuels?

Over the last 10 years RELATIVE TO ITS POPULATION SIZE demark has been a BIG exporter of (remember relative to its population size) of both oil and gas.

A net exporter of 130k barrels per day over the last 10 years. now that doesn’t sound like a lot but for Denmark it is a huge amount!! It would be the equivalent of the UK exporting 1.5 million barrels per day.

A net exporter of 4 billion cubic meters of natural gas over the last 10 years.
Again that doesn’t sound like a lot but it is huge for demark. It would be the equivlant of the UK exporting 45 billion cubic meters of gas.

By comparision over the last 10 years the UK has been a net exporter of oil by about 0.2 million barrels (net importer today) and it has been a net importer of gas.

So Denmark is rich due to a fossil fuel bonanza not silly wind farms!
If the UK had a spare 1.5 million barrels a day and 45 billion cubic meters of gas to sell then I am sure the UK would be better off than it is.

So if you think renewables are cheaper, which they are not, why don’t you go and build them unsubsidised and make a profit?

We don't treat all fossil fuels the same when it comes to cost. Why insist on doing this with renewables. This generalised dismissiveness of renewables is dogma, not science. It would be just as accurate for me to say "all british people are drunken, limey slouches".

I found figure 15 in your link, which seemed to indicate on small wind producer in Texas claimed a cost (after subsidies?) of 3 cents per kWh. I don't think I would take this as representative. Why did T Boone Pickens cancel his plans to use wind turbines in Texas and say:

Cheaper natural gas hurts wind farms, because cheaper gas makes gas-fired power plants a more attractive option for electricity generation. "You can't finance wind farms very well when natural gas is under $6" per million British thermal units, Mr. Pickens said. Natural-gas futures settled at $5.733 Wednesday afternoon on the New York Mercantile Exchange.

No one puts in wind turbines where they have to compete with coal. Even with subsidies, wind needs a price at least as high as $6 per million Btus, according to Pickens.

Robert's price for gas is almost that high. Pickens is talking about gas.

And, since only a little over half of the energy in nat gas is converted to electricity, it would seem you have to multiply the price of natural gas by nearly 2 to find the price at which it is competitive with wind, at least in the context like that of the Pickens quote where you're talking about electricity production. Taking Robert's figure for gas, wind ought to be competitive at a price of around $10 per million btu for wind, compared to natural gas for electricity production.

Unless I'm misreading the meaning of Robert's figures...it's frustrating not to have this stuff spelled out more explicitly. Of course Robert seems to be focusing on home heating, but then, hardly anyone in the US uses coal directly for home heating these days.

Unsubsidised wind power costs about 10p/kWh.
A modern gas fired station operates at 60% electrical efficiency and has overheads of about 1.5p

So that’s 10p minus 1.5p gives 8.5p.
Times that by 0.6 and you get 5.1p/kWh

That is to say gas would have to be 5.1p/kWh for wind to be competitive unsubsidised.
There are roughly 300kWh in a mbtu so that is about 1500p per mbtu

That’s roughly equal to $24 for a million BTU.

That is to say wind is competitive with gas when gas hits about $24 per million BTU
Those are the figures for the UK. Of course it will be slightly different in the US due to tax rates, different costs etc however it wont be greatly different.

What is for 100% sure is that wind is NOT competitive with gas at $6 per million BTU.

I think the issue is that even if people would like to pay more for the higher priced forms of energy, their pocketbooks do not really permit this, without recession and/or defaults on loans taking place. (Exceptions--a few high income people can afford the cost, so there may be some limited penetration, or governments can hide the cost for a while, but eventually have to raise taxes, and this results in the same effect as the higher direct cost)

What happens is that people end up paying more for oil or electricity and for things that use a lot of oil or electricity in their production. These products tend to be necessities (food, gasoline, home heating). The result is less money left over for everything else. Consumers cut back on non-necessities, or they default on their loans. The result looks pretty much like the situation we have been seeing recently.

But have you actually ever compared the costs of your rent/mortgage and your healthcare-costs with your electricity bill?
And have you ever considered reducing your electricity bill with simple efficiency measures?http://hes.lbl.gov/hes/profitable_dat.html

I am just saying what happens in the aggregate. I will grant you that some people will take part of their savings or discretionary income, and pay for insulation, and thus reduce their heating bills. This improvement is helpful, but down the road, if costs go up again, the customer must find a new way to cut back.

And all of these increases in costs operate more broadly than just a person's electricity bill. Healthcare is a big user or electricity, for example. When increases in costs are oil related, they tend to affect food and all types of goods that are transports.

There's not a lot of slack in there, and insulation and conservation have already cut the energy usage in half over two years ago. I'm inclined to agree with Gail: in my case (and probably very many others) if energy costs rise, there is a slim margin of discretionary funds, but basically its the groceries that would take a hit. I haven't any debt except the mortgage, but I've got a short enough time left on that that I don't want to mess it up.

At least in the US, I do not think the problem is that energy costs are so high that people have no money left to spend on efficiency measures.
Rather I think energy is so cheap that no one really bothers to conserve it, even low-income people. Walk around a low-income housing project and you will see lights turned on everywhere, doors and windows open leaking heat, TVs turned on, cars idling,etc. Of course the situation is similar in all income brackets.

Your idea of an economy where everyone is so strapped that they have no resources to divert to efficiency and renewable conversion looks nothing like the US I live in.

Some statistics indicating there just might be a little fat available for diversion in the US economy.
"Percentage of households that possess at least one television: 99
Number of TV sets in the average U.S. household: 2.24
Percentage of U.S. homes with three or more TV sets: 66
Number of hours per day that TV is on in an average U.S. home: 6 hours, 47 minutes
Percentage of Americans that regularly watch television while eating dinner: 66
Number of hours of TV watched annually by Americans: 250 billion
Value of that time assuming an average wage of S5/hour: S1.25 trillion
Percentage of Americans who pay for cable TV: 56
Number of videos rented daily in the U.S.: 6 million"

So maybe some of those US households with 3 or more TVs could sell or at least turn off their extra TVs and use the time and money saved to weatherstrip their doors/windows or insulate their attics. I understand that many (most) will not choose to, but the arguement that the resources are not available denies reality.

40% of US vehicles are SUVs or pickup trucks, (from wikipedia), and I would guess that less than 5% of those "utility" vehicles are needed or even used for "utility" purposes. (I am usually carrying more on my bicycle than the pickups stopped at the light next to me). So, again, simply downsizing to reasonable vehicles would provide a huge source of funds for renewable/efficiency conversion.

Many efficiency measures are low-cost/no-cost anyway, such as turning off lights, turning down thermostats, closing curtains.

I agree that right now electricity is so cheap it's hard to get people to pay any attention to it on the basis of price alone. In my experience of working with people to reduce their energy consumption, some who are motivated by green issues (worry about climate change and the horrific future their children are increasingly likely to endure) will be conscientious about making changes. But in general, when I recommend avoiding vampire power loss by plugging TV, stereo and computer equipment in power strips and turning them off when the equipment is not in use (exceptions can be made for Tivo, etc.) and mention this will save $8 or so dollars a month, approx $100 a year, easily paying for the investment in the power strips, people cannot believe I am even suggesting this as worth their time. $8 a month! That's two lattes. Why should they go to the trouble of buying a power strip for such petty change? Who cares if they burn through 3 extra kilowatt-hrs a day that does absolutely no good for them or anybody else?

And weatherstripping their front and back doors--well that would mean calling a handyman and paying a couple hundred dollars. Sure it might save a couple hundred dollars over the course of each winter, but it really is easier just to turn up the thermostat. The insulation level in their attic is of no interest--maybe it exists, maybe it doesn't. Frontload washers are beginning to be fashionable, but second and third refrigerators that chill a six pack of beer and a liter of soda and their entire collection of white wine are obviously essential, it doesn't matter if they use another 3-6 Kwh a day. Water is so cheap, people hose down their driveways when sweeping with a broom is just as quick. Gas is so cheap, people drive around in 5000 lb cars to deliver their single 60lb child to school, and then keep their cars idling for fifteen minutes when waiting in line to pick said child back up.

When we get to the point that the majority of Americans do not flagrantly and extravagantly waste energy without a thought, then we will know that energy is priced correctly.

Okay, sorry for the rant. Due to the utterly dysfunctional state government in California that requires a 60% majority to get anything done, funds for public transit have been raided (how about stolen?) to pay for happy things like prisons and over-priced bureaucrats. This in turn is causing draconian cuts in public transit in San Francisco, very possibly the most short-sighted thing our government could choose to do. So I'm in a bad mood. Thanks for listening.

How can you as an American wish to control prices considering that bedrock of communism is price controls?
Government dictating your life and what you can buy and spend is not a good thing, if you want that go to North Korea.

If you want Americans to go green then invent and produce green energy cheaper than gas/coal/oil. Don’t fix prices to manipulate Americans and their lives.

Having said that, wow you lot use a huge amount. Nearly twice as much as us in the UK and we use plenty!

Now you're Red-baiting, on top of it all? You've done a lot of typing today!

She didn't say 'use price controls'.. she just said energy and water were so cheap, people have not had to work hard to use them carefully.. that they don't pay attention to the wastefulness. Didn't you say that 'Subsidies hurt the economy' up there someplace? Would that include the terrific work our govt's have done to keep Gas cheap? We do this at our peril, and the costs are borne by the taxpayer. In fact, it's also a centralized form of 'price controls', and didn't even come from communists! But these wars we've bled our fortunes out over to keep the oil flowing have been very useful at tilting the field away from the renewables.. you want a fair playing field? I have to wonder..

How can you as an American wish to control prices considering that bedrock of communism is price controls?
Government dictating your life and what you can buy and spend is not a good thing, if you want that go to North Korea.

Good lord...that's like a quote right from US talk radio. Which, btw, is one of the greatest proponents of using huge amounts, no matter the foreign entanglements, wars, and massive expenses that are required to ensure access to energy supplies.

Tommy;
Your points about TV remind me of an assumption that regularly skews these discussions as well.

Cells (Welcome to your first day at The Oil Drum!!) has made a few economic points with the implication that consumer choices are essentially rational and informed.. that they are actually 'Choices'.. like buying and watching TV.

And yet, a massive part of our consumer economic model is based on 'Selling people things they don't need'.. Getting people addicted is a terrific tool for accomplishing this goal. TV is clearly an addiction, as are so many of the cheap food and snack options that people grow into unthinking habits of spending their money on, and as even George Bush said right out in the open 'We are Addicted to Oil (Energy?) in the US.'

The money is not moving through rational channels, and as such is not going to have rational self-corrections.

Bob

And after snarking on the following line for a few years now, I only just thought yesterday to make its opposite into a T-Shirt.

Gasoline does in fact have a range of BTU distributions depending on whether it is summer or winter, as well as the specific blending components that went into the blend. What I tried to do here is simply take the conservative end so nobody could accuse me of painting gasoline in a more flattering light with regard to price per BTU.

The BTU number I would like to see is some standard for Solar Heating, the unsexiest heat source we've got.. of course, it's hard to do it neatly, because it's really just dividing a system cost over the number of years it is going to run. It does remind me that with all of these other sources, the equipment costs are actually unrepresented in the figure, just the fuel.. so in that sense, the Solar is Free. (But I'd never get away with that one.. even while my current Solar Hot Air Panel and PV combo cost me less than 1/10 the cost of the furnace! 24degrees in Portland, and it's been blowing 100 degree air all day!!) http://s831.photobucket.com/albums/zz240/Ingto83/

Perhaps one of the reasons why wood pellets are more popular in Europe than in the US is because the average house size is much smaller --> fewer BTUs are needed to heat it, so the occupant has to haul fewer bags.
Just a WAG.
Rgds
WeekendPeak

Yes biomass power stations are increasing in the UK so overall consumption is perhaps growing fast.

But it probably represents a fraction of 1% of total energy used.

It is most definitely not a popular way to heat your home. I have only come across a single home using wood heating in my 20 years in the UK. Its nearly all NG and to a smaller extent electric/fuel oil/propane.

"Leading pellet producing countries in the EU are Sweden (1.7 million tonnes), Germany (900,000 tonnes) and Austria (800,000 tonnes). Both Sweden and Austria have been leading pellet countries since the earliest days of market development in Europe, in the 1990s. Growing production capacities can also be found, for example, in France, Spain, Latvia, Estonia and Poland. Meanwhile, Russia has significantly increased its production capacities – from 50,000 tonnes in 2005 to 550,000 tonnes in 2007 – nearly all of it for export. Canada’s plants produced about 1.3 million tonnes in 2008.

In terms of pellet consumption, Sweden, Germany and Austria lead the way in Europe, closely followed by France, where rapid market development has taken place in recent years. Italy has become one of the most important pellet consumers due to the increasing number of installed pellet stoves (about 800,000 stoves to date). Total annual pellet consumption in Europe presently amounts to about 6 million tonnes. On the North American market, about 2.3 million tonnes of pellets were consumed in 2008, with about 2 million tonnes of this in the USA." http://www.renewableenergyworld.com/rea/news/article/2009/03/burning-iss...

Pellet stoves in individual homes are growing in popularity, but I expect that a little research will reveal that district heating systems using pellets as a primary fuel account for even more space heating.

I think by popular he means in the US it might be 1% of homes and in Europe it might be 2% of homes.

The roots of this essay came from a recent presentation I saw. It showed projected biomass flows around the world, and showed a very strong flow from North America to Europe. I thought "That doesn't make any sense from an efficiency standpoint. We should use that biomass locally." Then I started looking at prices, and said "Aha!"

Robert,
Thanks for a very enlightning summary of energy sources/costs.

Technically, isn't electricity an energy carrier rather than an energy source? I understand that in a way solar, wind and hydro may be viewed as sources of electricity, though that is really an engineering choice:
-Solar can be used for thermal rather than PV
-Wind is/was used for mechanical purposes like grinding grain, pumping water
-Hydro also was used to power mills (mechanical energy) in addition to generating electricity.

By comparing prices per British Thermal Units (BTU) Robert has produced comparisons that are most meaningful for pure heating uses. As such, the comparison sheds light on choices that consumers will make for their home heating. If we were to compare prices for sources of electricity, the price comparisons would have to be different.

We have far overshot the limits of our own habitat, and have been a significant cause of the Sixth Great Die Off the planet has seen.

Those of us born after the mid-1950's will most likely die a violent death as we humans fight for diminishing resources and as the consequences of habitat destruction make the real situation that we live in more obvious.

Catton notes that we humans have always behaved based on our "definition of the situation" -- an important term for sociologists.

I suppose those who read Forbes and The Economist and such have a far different definition of our situation than I do.

Is it possible to get these specialized folks to read outside of their comfort zone?

Catton also notes that the specialization of our complex culture have created a culture of "pick pockets" where the executives and scientists are encouraged to not think about anything other than how their work can extract money from others.

Maximize dollar profit and minimize exposure to dollar loss -- even if it means breaking the law and every moral code humanity knows about.

Why doesn't Forbes ask scientists -- like Hansen, Catton, Flannery and others -- to clue them in on the scenarios we are creating right now, and ask how to make things better?

RR -- would you be willing to write such a "big picture" article, and if so what might it look like?

Very cool -- I am glad to hear that you have some interest in writing along those lines.

My daughter is in college now. She has worked very hard by the way, and got into what many people consider to be a superb university.

At a gathering of faculty and parents, I mentioned as few of the books I've been reading about environmental topics. I noted that in my opinion population overshoot and naive over-consumption, along with habitat destruction and resource shortages will radically alter our lives over the next 20 years, and will dominate the lives of these students.

And yet I noted that much of university curriculum seems to assume a continuation of conventional thought and business-as-usual into the future without end.

The facilitator noted that one of the goals of the institution is to teach students to read, study with passion and come up with these kinds of questions. One of the science faculty responded by essentially saying she shared this concern. She spoke with enthusiasm about an elective she teaches each fall on environmental studies. Even so this is one class each year -- and vague allusions to the environment in other courses.

Forbes, The Economist, WSJ, and similar publications seem to lack the imagination needed to understand that the our economic thought and action has terribly damaged the larger creation upon which it depends, and so by beginning with a severely flawed "definition of the situation" are leading us into a very uncomfortable and rapid die-off.

Our cultural institutions are unable to develop awareness of the changes in our environment and then to adapt to the changes. This will make the future even m ore bleak.

One Dr. Walter Brueggemann wrote an excellent book entitled "The Prophetic Imagination" that speaks to Catton's notion of the importance of "the definition of the situation." Brueggemann notes that complex cultures develop ideas and institutions that assume a continuation of the present into the future. This "Imperial" self-assurance prevents cultures (that is us right now) from seeing things the way they really are. The difference between the made-up reality and the real deal can be -- often is -- fatal.

Brueggeman speaks of the "Imperial Imagination" as being dulled, distracted, and bound by complacency and pride.

In contrast, the "Prophetic Imagination" continually and radically critiques its own "definition of the situation" and adapts to new information and analysis.

The Prophetic Imagination actually sounds like good scientific method.

William Catton argues that over-specialization actually unglues society in another way, even as "Imperial Imagination" is securely to falsehood. Over-specialization means that we are rewarded for not thinking about the real situation, and indeed are rewarded for committing fraud for profit. Catton calls this the "Pick Pocket Culture."

I submit that we have an Imperial Imagination bound to ideologies and superstitions which trap us in an economic Pick Pocket paradigm at a time when we definitely need the Prophetic Imagination.

E. O. Wilson, Tim Flannery, James Hanson, William Catton seem to have the Prophetic Imagination . Hanson states clearly that the role of money in politics binds us from making any meaningful change in response to the life-or-death demands of our real situation.

Can some of this be communicated to the folks who read the business press?

We need a reading list for citizens. Couple this with discussion groups to help process information and analysis.

Adlai Stevenson gave a talk at Princeton in 1954 called "The Educated Citizen." Here is an excerpt:

"The political organization that goes by the name of the United States of America consists of no fewer than 155,000 governing units, school boards, conservation districts, municipalities, states, the nation, etc. It is operated by some one million elected officials, ranging from mosquito district trustee to President, and by some six million full-time employees. Our government is so large and so complicated that few understand it well and others barely understand it at all. Yet we must try to understand it and to make it function better.

For the power, for good or evil, of this American political organization is virtually beyond measurement. The decisions which it makes, the uses to which it devotes its immense resources, the leadership which it provides on moral as well as material questions, all appear likely to determine the fate of the modern world.

All this is to say that your power is virtually beyond measurement. For it is to you, to your enlightened attention, that American government must look for the sources of its power. You dare not, if I may say so, withhold your attention. For if you do, if those young Americans who have the advantage of education, perspective, and self-discipline do not participate to the fullest extent of their ability, America will stumble, and if America stumbles the world falls. "

Education in our world is lifelong, formal and informal. We have abandoned actual education at every step of the way, however. We now have a citizenry more suited to monarchy or dictatorship than to a democratic republic.

Lifelong education is nearly non-existent, while citizenship has shrunk to diverting the energy of the people into engagement with a public discourse that has little relation to the acts of the government.

The so-called democracy we see is a rather thin veil. It sure confuses many of the people who pour themselves into contemporary politics only to be rejected and abused by the very politicians they have supported. This is because, as Jim Hansen notes in his new book, politics will not bring about change until the role of money is taken out of politics.

Catton also notes that the specialization of our complex culture have created a culture of "pick pockets" where the executives and scientists are encouraged to not think about anything other than how their work can extract money from others.

Hmm, I'm willing to wager a rather large sum of money that he has many more executives than scientists in his circle of personal acquaintances.

Probably not, coming from academia and science himself, and the interviews I have viewed, his surroundings seem modest.
Capitalism demands one to be delusional and superstition based to work, and Catton abhors this, while executives need to be ignorant, or they could not do their jobs
Of course, I could be wrong, as I have no primary information.

I buy wind/ small hydro electricity in NYS and it costs a premium of +1 something cents a KWh. Wind only generated electricity cost a premium of 2.5 cent a KWh (last I looked). There is also a fee for NYSERDA which is a subsidy for "alternatives" that all of us pay on our electric bill in NYS. NYS has a fair amount of "big project" hydro as well and some nuke.
I couldn't install enough solar PV on my lot to make enough electricity to heat with if I filled up the whole yard with the array.
I heat our home with natural gas as most my neighbors do. For me to convert to heating this building with electricity would cost a substatial amount of up front cost and it's debatable if it would save me operating costs. Especially with the premium electrc cost. I looked into GS water heat pump.
I don't know how you could convince folks to make that investment for "carbon credit" without subsidy when they can't make the mortgage.
I don't think you could convert very many homes of the development to passive solar at all. Mine included. If you build new "solar" home are the old ones still in use?
Seams to me quite a task to "change out" the infrastruct we have.

You're right, you wouldn't want to use Solar Electric for heating.. but direct Solar Heat provides a good number of KCals, and a decent return on investment, and there are Solar PV setups that actually grab heat from the panels and use that for preheating domestic water. (Look up Ascendant Energy in Maine) Of course Air source Heatpumps and Geothermal really deserve some looking into as well.

I purchase low-impact power from Bullfrog Power (http://www.bullfrogpower.com/) and the cost premium is just 2-cents per kWh -- $22.00 CDN/month more than offsets all our household needs, including space heating and DHW. I use to spend four times that on satellite TV which I seldom watched and, frankly, I derive far more satisfaction from the former than I ever did the latter.

Please help us spread Robert's work here around the interwebs! Help us spread awareness and educate. This is the perfect post to send to friends, family, colleagues, neighbors, etc.

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The big downside to coal, besides all the externalized health costs/GCC costs, is that it's not very energy dense. At 500 ton*miles/gallon, coal costs an additional 1.7c/mile per mmbtu to transport. After ~25 miles, the price of PRB coal doubles.

One suggestion that has been made is to burn the coal in Wyoming (or wherever), and only transport the electricity. If this is done, most of the transport costs can be saved, and the pollution is concentrated in a fairly unpopulated state. If transmission lines were built, coal fired electricity imported from Wyoming to the East Coast would be quite a bit cheaper than wind electricity (also transported long-distance by transmission lines).

You're thinking of some economic consequenses that have workarounds, while glibly ignoring the health and environmental consequences.

We can't eat the fish from our rivers here in pristine Maine, because of the Mercury raining onto our watersheds from these 'affordable' midwest coal power plants. What those energy customers are 'affording', is the destruction of MY ecosystems up here, as an unbilled cost for running Their lights, facilitated by energy companies who have been allowed to sell power without charging the full costs of doing this business. Eating fish in inland Maine is not some preferential fad diet (and Neither is Organic food really, but to stick with the point..) many communities lived off of these rivers, and now have to eat at McDonalds.

But it's not best compared to someone choosing Organic Foods, it is comparable to selling Lead Paint. It is direct poisoning, and one with only a brief time delay before it starts flowing downstream and hitting us right back with our own selfish shortsightedness. YOUR proudly trumpeted selfish shortsightedness.

People can't afford it because they've been manipulated, cheated and poisoned to the edge of bankruptcy by most of the same corporations to whom they send their obedient monthly subscription, premium and utility checks.

Gail, you're wrong about saving the transportation cost, at least at today's prices. Energy costs for diesel locomotives hauling coal are about half that of the electrical energy that would lost in transmission, not to mention releasing 5 times less CO2. You've never actually done any calculations on this, have you?

I read an analysis of HV DC alternatives for a "foothills of the Andes" hydropower plant to urban Brazil. The range of line losses for the various voltages and wire diameters was 1.8 to 1 from least to most efficient.

The economic cost of the lost hydropower was in the range of $15/MWh and they went with the option towards the efficient end.

Make electricity valuable (say a carbon tax on coal fired electricity) and significantly more efficient transmission will happen.

The range of line losses for the various voltages and wire diameters was 1.8 to 1 from least to most efficient.

For what distance? You need to know this to make comparisons. I'm mean, looking at the map of Brazil I suspect over a 1000 miles, but you still need to be specific.

The economic cost of the lost hydropower was in the range of $15/MWh and they went with the option towards the efficient end.

Not exactly a fair comparison to coal, since you can't put hydro electricity on a train and move it closer to the point of consumption. (And what was the cost of the more efficient option compared to the less efficient? Really a whole different ball o' wax regarding cost comparison.)

I take your point in as far as my numbers were back-of-the-envelope, and showed roughly comparable costs, so a relatively small swing in prices tips the balance of the outcome. Still, what bugs me is that Gail makes an sweeping assertion ("save most of the transportation cost") which doesn't seem very supportable at first glance. It really sounds like she heard this idea somewhere, and jumped to conclusions in assuming it's practical.

Can anyone recommend an up-to-date study on North American biomass production potential? I am looking for a non-biased analysis that includes all the energy and nutrient inputs required for sustainable production.

This article is of little value. What matters is not the wholesale cost of the energy, but the cost to the energy user. First there are the distribution costs. I would challenge anyone here to post the local retail cost of coal (I can't because it isn't available). But if it is available I would guess it would be 10 times the wholesale prices quoted (massive transportation cost...). Other types of energy are going to have different markups (nothing anywhere near as high as the retail coal markup). Second there are the conversion costs. End users can only use energy in particular forms: heating, lighting, running motors... So if you heat with electricity 100% of the energy is converted to heat. If you heat with coal, propane, natural gas part of the energy is going to go up the chimney.

What matters is not the wholesale cost of the energy, but the cost to the energy user.

It all depends upon what you are trying to understand. One of the things I want to know - as a developer of alternatives to oil and gas - is what I am competing against. The wholesale price is what I have to ultimately compete against. The cost to the user can be greatly distorted by government policies - which are fickle. If I point out that in Venezuela gasoline is ten cents a gallon (or whatever their subsidized price is) then that doesn't necessarily help me understand what the future might look like because government policies can change all the time. I am trying to get the taxes out of this to understand the underlying price.

I would challenge anyone here to post the local retail cost of coal (I can't because it isn't available). But if it is available I would guess it would be 10 times the wholesale prices quoted

Well, you would be wrong. Those who think there are massive transportation costs that add an order of magnitude to the price can simply try to do a bit of research prior to jumping to conclusions:

That Powder River basin coal that wholesales for $10/short ton gets delivered to utilities in neighboring states for $13-$15/ton, and it can get into the Okla/Tex. region for $20-25. So instead of $0.50/MMBTU, you may be up to $1.50. Does that substantially change the picture for you?

What this tells me is that there will be great financial pressure to turn to coal, especially during times of energy shortages. The retail price wouldn't necessarily help me understand that because it may have been highly distorted by policies that government can change when they want to.

I think it is of great value. A couple of years ago I tried to sit down and calculate something similar to answer the question of how various energy sources stacked up. I didn't get far; too many decisions as to where in the stream to pluck cost, how to place different types of energy, etc. For instance, you can go out and cut down a tree and burn it for heat, or you can mine coal, smelt steel, build a wind turbine, generate electricity, and run it through a baseboard heater. How to compare the two?

The more you think about it the more sense it makes to just look at cost, and to convert values to a standard measure like Btu's or joules. As Robert says, it depends on what you are trying to understand, but you have to have some stable way of breaking things down.

I think its also very useful in the EROEI calculation. Anyone who's struggled with that would say the first problem is any energy product you look at has a basic energy in/energy out formula, but inherently the types of energy are different. To get anything sensible, you can convert both sides of the equation to Btu's or joules, or in more difficult situations simply to cost. There are always choices and qualifications based on what you are trying to understand that put some burden on the reader, but that's just the nature of things; nothing simpler is available that I know of.

I was under the impression (I think from some comment on TOD) that to convert the stand unit of measure for pricing NG - MMBtu ($5.13 today) to barrel of oil ($72.89 today) in terms of the BTUs contained in each measure - that the ratio was about 6:1. The point of this being that $6.00 NG would be about equal to $36 bbl of oil just on the raw BTUs available.

So, at 42 gal per bbl we have about 5,796,000 BTU in a barrel and NG is measured at 1,000,000. Therefore it seems that the 6:1 is in the ball park. Is this thinking correct?

If 6:1 is about right, then it seems like one of you guys with lots more smarts than I have about this stuff, could come up with some kind of ballpark figure for the premium that would have to be added to NG to compete with oil for transportation purposes. For purposes of this question, I would temporarily ignore the cost of building a NG infrastructure for widespread transportation. I was mostly wondering about the comparison of refining oil into gasoline versus doing whatever to get NG to a endpoint where it is capable of powering a car/bus/truck. A future comparison could be about the capital cost of refineries, tankers, gas stations, etc versus whatever for NG.

What I'm most interested in is a practical conversion factor like saying it takes X% more effort/time/resources to use NG in a car than gasoline. From there one could think about the cost differential between NG and oil for transportation.

The context of my original question had to do mostly with promoting mass transportation - would it really make sense to push for a greatly expanded network of NG powered buses versus light rail? Given that buses could be deployed much faster that rail. Of course, in my way of thinking, private autos would have governors with a top speed of 40 mph and be taxed at the full rate they impact the "commons". That would certainly encourage bikes and buses.

Use standard units where you can. A standard unit in energy is the kWh.

A million BTU is about 300kWh
A barrel of oil contains about 1700kWh
So converting one to the other is about 5.7x (or your 6 if you want to round up)
So with gas at $6 per million BTU that is equivalent to oil at $6 times 5.7 = $34 a barrel

However gas last year was not $6 but closer to $4.

The problem with gas transport as far as I am aware is that gas internal combustion engines are less efficient than petrol/diesel versions. This will probably be largely down to the fact that we have spent many billions and resources refining petrol/diesel engines while we have spent little refining gas IC engines.

So although natural gas may be half the price per BTU it wont be half the price to fill up because the efficiency of the engine will be lower. I don’t have accurate data on the efficiency of petrol vs gas engines so I cant say at this moment.

The problem with converting lots of cars to NG is that we don’t have a great surplus of it. Plus it seems a waste to burn NG in cars at 20% efficiency when it can be used at 60% efficiency in a NG fired power station.

Stoker coal mined nearby was ninety five dollars a ton in western Virginia by the eighteen ton truck load a month ago.I'm not sure if you have to buy more than one load at a time to get it at that price-a local factory pays that by the truck load.Smaller quantities would probably be at least ten dollars a ton more to cover the trucking costs.

I've recently done a similar analysis, and include a chart on this on my blog, http://michaelaucott.blogspot.com. One source of energy you did not include is nuclear fuel. I've estimated this cost based on data from USDOE/EIA on quantities of nuclear fuel purchased and the power produced by these plants. It's about $0.30 per million Btu. This explains why utilities try to run their nuclear plants at maximum capacity.

Actually since 1 Million Btu is about 0.3 MWh. Nuclear fuel costs are 2.1$ per Million Btu and could actually go up considerably if uranium mining production continues to not meet demand:http://www.world-nuclear.org/info/inf02.html

Dr. Kim opened our eyes.
He told his audience that fuel is four to five times the ‘hyped’ cost of nuclear power – between 20 and 25 percent instead of the mere five percent.
He announced, “At $1000/pound for uranium, a nuclear utility’s fuel cost would rise to $70/MWH compared to $5/MWH at legacy contract prices of about $20/pound.
Dr. Kim shot down the premature conclusion that utilities would rather pay the high prices instead of going through a costly decommissioning process. He said, “There is no compulsion to immediately decommission – stations can be held in standby or cold shutdown.”
Finally, he took up the matter of ‘utilities not caring about fuel costs.’ He pointed out, “Take $900 million from your company’s annual net profits. See how happy your management is.”
Because of what we've previously been led to believe, we questioned his numbers and conclusions. So we asked TradeTech’s Gene Clark for a second opinion. Clark emailed back and confirmed Dr. Kim’s calculations were accurate, writing, “At $1000/lb U3O8, I get $86.6/MWh total, but $16.6 is the carrying cost. Without the carrying cost, it’s exactly $70.”

First on energy density I think MJ/kg is the best unit for comparison. Weight rather than volume allows for different API liquids or gas compressed at different pressures. A megajoule is about 1000 BTU. From the above table gasoline is 115,000 BTU/US gall which is roughly 115 MJ per 3.3 kg or 35 MJ/kg. Metric is invariably simpler and units like bushels, yards and so on are just confusing.

A bigger issue is that of price effects of carbon taxes vs. output targets. Suppose there are no carbon taxes but 20% of the grid electrical output has to be renewable. Since that is difficult to achieve the average (unsubsidised) price of electricity will go up. Therefore that target will have a carbon price equivalent effect. Which is better, carbon taxes or targets, is hard to say. Weird stuff will emerge like the fact gas fired electricity is 50% lower carbon than coal but still not renewable. A mishmash of carbon rules and renewable rules will create problems. For example in Australia heat pump water heaters are treated as solar energy even though they have nothing to do with sunlight. An overall auctioned CO2 cap is probably the best approach and I think it would work if politicians didn't create so many loopholes.

The statement should have been provisoed with, 'this side of the peak oil crisis'.

The fact that this happens even for a short period signifies that a third and likely ultimate oil stock has started. The cheat is starting to run out.

Do note it was a spike in NG, not a plunge in the renewables market. Still can't foresee anything driving renewables cost of production down sharply. If anything, ongoing upward pressure in fossil fuels should increase the upward pressure on renewables costs too.

If you've ever visited a developing country you might have noticed that efficient light bulbs are more popular than in the developed world. The electricity costs are actually considerable if one lives on a lower income and people find ways to lower their electricity bill. (Just because they are poor doesn't mean they can't do math.)

There are many reason people do things. Price is just the most important one.

Problems with reliability of service is a great motivator for people to make spend extra on systems redundancy and duel mode systems.

Population density is a factor. If you can share capital cost between many people, it makes big spends to achieve scale doable. A house in a remote rural setting will have solar because too much of the normally shared network costs, can't be shared. This decision is made not because of the generation costs, but because of the distribution costs.

People in poor countries may by doing expensive small systems because it's the best available. That could be the density issue we just talked about above or that the wider society hasn't done electrification well enough that people feel they can rely on it alone.

There is also regulation and subsidies. The use of solar thermal collectors in China was government driven. Done to curb local air pollution issues and leave cheap coal generated electricity available for industry. The largely state owned and state influenced industrial sector then used this cheap power for that nation's pre-GFC export drive.

Still not sure what light bulb efficiency has to do with the cost structures of fossil fuel, solar and wind.

There is more to decision making than just maths.

My comment that solar and wind has a fundamental disadvantage of having to do concentration where fossil fuels don't still holds.

I suspect your $10 figure is wrong because it indicates wind generates unsubsidised at 6-7 US cents. Here in the UK unsubsidised it generates electricity at about 15 US cents. That’s too big a difference. Generally taxes in the US are lower so that might account for a bit of it but it wont be that big a difference.

I am pretty confident at least in Europe we need a gas price of over $20 for wind to work unsubsidised. I suspect it is a similar figure in the US.

At $10 MMBTU, NG generated electricity is more expensive than unsubsidized wind

That's true in Canada as well.

However, the UK does not have vast areas of windswept prairie to put the wind generators on. It's not a very big country, it's heavily populated, and the countryside is like one big garden. If you tried to supply the entire English market with wind turbines, you'd have to blanket the entire country with windmills, which would upset people. Hence the interest in offshore wind generation.

I don’t know, if wind turbines dropped in price by 60-70% they would be cost competitive with coal and gas.
60-70% fall isn’t impossible. That like a $1m turbine going to $300-400k

Solar PV is the one truly distributed green source. Currently it is very very expensive. However if it dropped in price 90% that too would be cheaper than coal/gas for electricity. However a 90% drop is a LOT.

Solar space heating is close. I think with some investment it could be done. So that would be cheaper than oil/gas/wood pellet heating.

I understand you're a new member here, but I imagine you have been a reader for some time. Its hardly my place to say, but you might note that simple name calling and the old childish and inflammatory nazi/communist/stalinist/maoist/whatever else guilt by resemblance-type remarks are blessedly rare here.

In the US "informative debate" is very rare, which is one of the reasons TOD is so valued. I wouldn't like to see it turned into a talk-radio style personality battle and opinion-fest.

Gaming the market by taxing, quotas which raise the price of fossil fuel, and force utilities to use renewable s is what has got the the green market up and running in countries such as German Spain and Denmark.

Robert, your list really is a bit strange. On the one hand, you've included electricity, without comparing different electricity sources such as coal, wind, solar, etc. I noted on the Forbes site that you say wind is irrelevant, since it's included in the average cost of electricity. But then why include coal, when pretty much no one in the US uses coal for heating?

There's more than one way to do price a comparison. It would be nice to have a little clarification on what you think this particular price comparison is good for, and what it isn't.

After reading Robert's article, I must agree. Robert reported the cost for pellets which was taken from a web site which listed retail prices on a per ton basis, as I understand it. But, the price of coal appears to be mine mouth prices. The same sort of distortion appears in the gasoline and propane listings in that the consumer prices are larger for both. Locally, gasoline costs around $2.75 a gallon and propane is even more since one must also pay for delivery and the price may include rental of the storage tank for the propane. Around here, small quantities of kerosene sell for the same at the pump as diesel, since kerosene can be used in a diesel engine, even though the kerosene is not supposed to be used as motor fuel. Here's data from the EIA which shows that propane costs the retail consumer about $1.25 a gallon more than the wholesale price and the retail price of heating oil is almost $0,80 more than wholesale.

The choice as to which primary energy source is used often comes down the the final consumer. Comparing the price of electricity and the price of coal misses the fact that most electricity is generated by coal. Perhaps it would be better if the price of coal should be stated in $ per kWh generated and compared with natural gas generated electricity. Then, the cost of alternatives, such as wind or PV generated electricity might be better understood.

The wholesale prices are minus taxes. Add in all the taxes and you can get a very distorted picture of how these energy sources really rank in the market. A government in one area can put a very high tax or tax credit on any of these, distorting the picture immensely. So what I tried to do was use wholesale pricing wherever possible. For wood pellets, I don't have wholesale, but I do have bulk and that is minus the sales taxes. So I think it is a pretty reasonable comparison.

I noted on the Forbes site that you say wind is irrelevant, since it's included in the average cost of electricity. But then why include coal, when pretty much no one in the US uses coal for heating?

That's not what I said. I said show me where I can buy just wind power (or wind) and I will include it. I can buy coal. I can buy natural gas. I can buy diesel. I can use all for generating electricity (or heat).

It would be nice to have a little clarification on what you think this particular price comparison is good for, and what it isn't.

The original investigation was to try to understand why the pellet market was forecast out of the U.S. and into Europe. So I started looking at how many BTUs you could get for your dollar. Some of the others are just thrown in (and I explained this about electricity) just to get a feel for where they stand.

The bottom line is that I am working on developing alternatives to oil and coal. I need to know what kind of competition I am up against, and thus I think $/MMBTU is a good metric to measure against. If I develop a coal replacement that is 10 times the price of coal, I won't be able to compete with coal unless I have heavy government support - which is not something I will build a business model on.

I think the clarification that this comparison is most useful for looking at a market for heating energy (i.e. pellets) is not trivial. It's actually inherent in your use of BTU as a comparison point. Coal and natural gas technologies have different btu/kwh conversion rates. One can not sensibly use the numbers in your article to compare the relatively economy of these same sources to produce electricity. They'd need to be converted somehow.

Cells - The basic problem between any comparison of wind and fossil fired power generation is that the costs and benefits have different distributions in time. If you take a conventional NPV calculation of a wind farm and a coal plant (let’s ignore external environmental costs for the time being), then yes, wind comes about twice as expensive (full cost of 80ish€/MWh compared to 40ish€/MWh for coal – exact numbers depend on all sorts of project specific factors). However, if you measure the lifetime EROEI of wind power against coal then the positions are reversed - it is around 18:1 for wind and 8:1 for coal (http://www.uvm.edu/~ikubisze/site/Kubiszewski_2009_wind%20EROI.pdf). The reason for this is that the cost of wind is front loaded (typically over 80% of total lifetime cost is capex), whereas the benefits stretch over twenty five years. Coal, in contrast, has a much lower initial capital expenditure as a proportion of total lifetime cost. This, in turn, means that the money cost of wind power is incredibly sensitive to the discount rate used – much more so than coal. Given that the whole theory of discounting is built on sand, the money cost comparison of different electricity production systems is of marginally less value than useless. But we carry on using it regardless, which is exactly why we are in this mess in the first place.

The discount rate today is tiny, about 4-5% which is fair. If rates were 20% you may have an argument.

Either way its about productivity. It takes less men and less resources to dig up a given quantity of coal and burn it in a power station than it does to build a wind farm and derive the electric from that.

Cells - you are simply wrong. It does not take fewer men and resources to generate electricity from coal - that is my whole point. Indeed, that is why the EROEI of wind is better than coal. The difference between the two technologies is that the resources consumed by each are distributed differently in time and that is why wind appears to be more expensive. Go and do a basic NPV calculation of a wind farm and a coal plant and you will see that at zero discount rate wind is a bit cheaper than coal/MWh (they are not far apart with wind a bit cheaper). This means, by definition, that a wind farm consumes fewer resources over its lifetime. When the notion of discounting is introduced, however, and short term costs have a much higher weighting than longer term costs, wind starts to look more expensive. And this brings us to the key question: what is the right discount rate to use? You say 4-5% is tiny and fair; and I say no it isn’t, it is very high and very far from fair. So who is right? There is no objective right answer to this question: it is about ethics and values, and strategic choices that people alive today have to make on behalf of the people of tomorrow. So when you do your cost analysis, just remember that you have already built in an arbitrary assumption which has no sound theoretical basis. I suggest you read Colin Price’s ‘Time, Discounting and Value’ (Blackstone 1993) for a devastating critique of why discounting the future with a negative uniform exponential function cannot be justified.

A discount value of zero means it take no capital to build things which is stupid.

Do you work for free?

Was your house built for free? Do people rent homes and business for zero in your country as your mythical discount rate is zero?

Your being very very very silly.

Nukes with a discount rate of zero would be producing power for less than 1 cent/kWh but it takes a lot of materials, effort, time, resources to build the nuke. That is a cost. The same is true for wind turbines.

This is the first time I have come across this argument. It is so silly!

BTW for anyone who doesn’t know what he is talking about he is saying we should use a figure of 0% on interest rates when deciding what to build. But no one is going to give you capital or work for you for 0%.
You live in la la land!

You intend to fund a 20-30-40 year investment by rolling over 1 year US treasuries?
Realistically you can use the 20-30 year t-bond rate at best which is about 4-5%.
Accounting tricks wont help build wind farms.

We need the price to go down where wind farms compete on their own with coal/gas stations. Then they will take off. Until then they will be drops in oceans.

Cells - you fail to distinguish between the real world of physical resources and the fantasy world of fiat money where your market set interest rates exist. Please try and think a bit more deeply about this issue. Also, don't try to ridicule people who dont agree with you, it demeans you. You have much to learn. You really have no idea of what you are talking about.

Someone might lend you money at 0% interest because Jesus said not to charge interest.

My sister, although not a Mennonite, once belonged to a credit union in a Mennonite community. The Mennonites refused to accept interest on their bank accounts. They just deposited money at zero interest and never borrowed anything. They also painted their car bumpers black to show their lack of ostentation, but they bought Cadillacs because they could pay cash for them.

She said she'd never had such good service. Getting a loan involved having tea and cookies with the loan officer. The credit union gave her a car loan at two points below prime.

Jaggedben and RockyMtnGuy - those are good examples of different ethical perspectives which lead to completely different choices about the future. I was not actually suggesting that we use zero interest rates to discount the future - cells misunderstood my point - I was just trying to show that from a timeless perspective wind consumes fewer resources than coal, and it is only when we introduce discounting that it looks like it consumes more resources. I know all of the conventional arguments for why we discount the future, but it still doesn't feel right to me to use a uniform negative exponential to dicount the future, not least because people don't, as a matter of fact, behave as if the discount the future using a uniform negative exponential. Indeed, people's discount rates (as evidenced by their behaviours) tend to fall the further into the future they think. This is why it is essential for Government's to 'subsise' wind energy - they are correcting for the fact that the way we value investments today is somehow not suited for the the really big choices we as societies have to make. Capitalist idealogues will never accept this point because they simply do not accept that there is anything wrong with exponential discounting, even when their own behaviour flatly contradicts the theory. I personally use all sorts of tricks to prevent my short term (high discount rate) self from overriding my own long term goals, which require me to take a low discount rate long term perspective to defer short term gratification. This is exactly what Government's are doing when they subsidise wind.

Cells – Why don’t you go and do the calculation before you pass judgment? I have - you simply add up all lifetime costs of both wind power and coal fired power stations, without taking account of when those costs occur in time (this includes the total lifetime capex and opex – labour, consumables, etc etc). You then divide it the lifetime MWh of production. On this basis wind comes out slightly cheaper: 20-25€/MWh for a new wind farm built today compared to 25-30€/MWh for a new coal plant. This means it consumes fewer resources for every MWh of production. Ths point is the large cost discrepancy we get in a conventional valuation disappears when you take a timeless perspective. The question now becomes, how do you value these different distributions of cost over time? You think it is as simple as using a uniform negative exponential function - I don’t. Try reading the following article for a concise analysis of the issue. David Pearce, Ben Groom, Cameron J. Hepburn, and Phoebe Koundouri. "Valuing the future: recent advances in social discounting" World Economics 4.2 (2003): 121-141.

Well I am more than happy to look at your figures but you haven’t posted it, unless I have missed it over the 350 posts.

If you’re willing please do the following and be as honest as possible.

Building a gas fired station operating at 60% base load efficiency being fed natural gas running for 40 years.
Now we need to make some assumptions here and this is where the whole process gets fuzzy because we don’t know what the price of natural gas over the next 40 years will be.

However we do know what roughly speaking the production cost will be. The UK will be producing enough natural gas to feed at least 1 power station from now to 40 years.

In the UK it costs our government/companies roughly speaking 0.5p/kWh to produce this natural gas (actually it is less but we are rounding up to make the math simpler and more straight forward).

So in todays money this 1GWe gas fired station will cost.

£1.75B in natural gas
£0.5B to build the plant
£3.5B to run the plant and maintain it (roughly 1p/kWh overhead costs)

Total cost = £5.75B over 40 years in todays money or £16.50 per MWh

Now lets look at wind:

Installed capacity apparently costs 1,300 euros per MW (according to wiki) that is equal to about £1500 per MW.
Now say £1500 per MW installed capacity and that 25% of capacity is average production.
So we get a cost of £6,000 per MW or it would take £6B to build a 1GWe wind farm.

Maintenance cost of that huge wind farm which will not be zero. I don’t know the figure but lets say it is 50% less than a gas plant. That would be £1.75B to maintain the wind farm over 40 years

Backup costs to back up the power when the wind isn’t blowing. This will be in the region of 1p/kWh which will add £3.5B over 40 years!

The interest on the huge capital to build the £6B wind farm rather than the £0.5B gas station. I know that some of you think people should work and lend for free but that isn’t reality unless you plan to enslave people.

But ill be generous and we can take a real interest rate of only 2%

That’s an interest cost of £7.25B

So the total cost for the wind farm is £18.5B over 40 years
As I suspected more than 3x as expensive.

Now you will still have a wind turbine after 40 years. Lets say in todays money you get half your £6B back (ie major overall required).

Your lifetime gas cost looks way too low and your opex looks way too high, but I would not argue with the overall number. However, if I multiply 40x365x24x0,6 I get total lifetime production of 210240 hours which when divided into 5.75billion gives 27.35 per MWh - so I dont know where you got the 16.50/MWh from. Also this does not include the cost of CO2 under the ETS which would add another 5/MWh.

Your capex for wind is a bit high (1300 is about right) and your opex is a shade too high (1.5bn is right). Your load factor is also too low - a good modern windfarm should achieve 30-35% (although this is obviously highly site specific). Using these numbers I get 23.81/MWh for wind.

An electricity grid is run as an integrated system so I dont see why you include back up for wind - all systems require back up capacity, even a 100% gas system would require some back up capacity so that should be included as well if you want to make a fair comparison. Also, the cost for back up you have is way too high - it should be about 3/MWh, which makes the total 26/MWh for wind against 27/MWh for a CCGT. By the way, this includes human labour.

Interest is not relevant to this calculation, that is the whole point I am making, as it does not represent resource consumption (the capital investment represents that) - it represents a transfer of value from the user of the capital to the owner of that capital for the right to use the capital but no resources are consumed in this transaction.

Interest is me doing work for you today for you to do work for me in the future.
That has a cost because I don’t know if you will honour it or if the work we do will be successful or if you die before payment, all sorts of risk.

Hence having a positive rate of interest is the way the world works and the way it should logically work.
Saying don’t take into account interest is stupid. Would you lend my business interest at 0% for 40 years with the risk that I don’t pay you back?

We need to consider the real world and how it works not la la land.

Yes gas stations will need backup too. However its available capacity will be very high. On top of my head I know the US nuclear capacity is 91.1% which means it is only down and not producing at full for less than 9% of the time. I don’t know what the gas fired station availability is but it will be similar perhaps even better than the nuclear availability.

More importantly you can choose when to take down the nuke or gas station for refuelling or maintenance, ie at low demand months.

With wind it highly varies from near 0% to near 100% and at all times of the day. Hence it needs near 100% backup vs perhaps 5% backup for a gas fired station.

The cost of backup will be at least 1p/kWh which is basically the overhead cost of a coal/gas fired station.
Any other form, ie pumped storage, will likely be far more expensive (plus efficency losses)

Lets do the math again for avoidance of doubt. [do correct errors and highlight bad assumptions if you believe there are any]

1GWe Nat Gas fired station over 40 years as 60% EE.
£500m cost to build and £1,100m interest over 40 years at 3% real rate.
£6B for each 1p/kWh gas costs (ie £12B if gas is 2p/kWh or £3B if gas is 0.5p/kWh) (I think I used the electricity figure last time instead of the gas figure which was an error)
£3.5B running costs inc maintenance and repair (1p/kWhe is about right)

Total cost = £5.1 billion plus £6B for every penny on the cost of Nat Gas.
Now we don’t know the cost of Nat Gas but if it is 1p/kWh total cost = £11.1B if it is 2p/kWh total cost is 17.1B.

That gives a range of £31/MWh to £49/MWh [however note, this includes profit for the operator which I forget to mention earlier. That profit is within the 1p/kWhe maintenance and repair]. We must also take in the possibility that NAT GAS stays cheap at 0.5p/kWh on long-ish contracts as they are now in which case the cost is £23/MWh

For the wind farm.
Assuming 25% capacity which is reasonable for most of Europe, Germany is closer to 20% UK 30% (no idea where you got 35% remember no cherry picking)

£6B to build (inc power lines to the wind farm) plus 22.8B in interest over 40 years at 4% (I have chosen 4% instead of 3% to take into account that you want a profit to build the wind farm. 1% profit is more than reasonable for this calculation. Most businesses wouldn’t work to 1% but I’m being generous here and remember we are talking real interest rates not nominal)

We don’t know the maintenance and repair costs. What I do know is that the maintenance and repair costs of a gas fired station are very low. I can imagine the maintenance and repair costs of 1,000 wind turbines being less than the gas station??? However lets say 0.5p/kWh which is half the figure we gave to the gas fired station.
That adds £1.75B to maintenance and repair

£3.5B backup cost (1p/kWhe)

Total cost about £34B

However lets assume the base of the tower is still fine in 40 years and with a major repair you can get it up and running for another 40 years. Lets say the cost is half, that is to say you get £3B back.

Total cost now about £31B or £89/MWH [not surprisingly I said unsubsidised wind cost 9-12p, we are using a very low rate of interest on this calculation which is probably why it is at the lower range of my estimate]

So we have natural gas in the range of £23 to £49 with a likely cost somewhere in the upper middle, say £35/MWh VS wind at £89/MWh so wind is still more than twice nearly 3 times as expensive as NAT gas and this is considering a very generous 4% rate of real interest inc a profit margin. With a more realistic 8%-10% the figures would be horrible for wind!

Also take into account a gas-fired station can be put right where there is demand. Say in or very close to London hence low losses. A wind farm will not be as close and may be all the way up in Scotland. So the wind farm might need 5% more turbines to make up for the losses which increases its costs but lets ignore that for now.

No matter how you look at it wind power today costs more and is likely to cost more than gas fired stations.
Business are not stupid, they do all these costing. After all they are out to earn an honest buck, if wind did that they would build wind.

Wind turbines need to go down in price 75% before they work unsubsidised and we need them to work unsubsidised for them to be rolled out en mass.

Cells – thanks for the lesson in corporate finance, but can put down your MBA manual for a few minutes try reading what I actually said in my earlier post. I do not advocate using a discount rate of zero, I simply pointed out that from a timeless perspective wind consumes fewer resources than coal.

And I said even with a timeless perspective wind uses more resources than coal. The thing is you don’t seem to think human labour is a resource but it most definitely is a resource. When you include human labour as a resource wind uses more resources even assuming a timeline of infinity.

And if you want to put a figure on it. Roughly speaking the resource of human labour per hour = 100kg of coal.
If you add all the resources and human labour to build, maintain and run a wind farm converting the figure into kg of coal, and you do the same for building and running a coal fired station you will see it takes less “coal (remember the conversion of 1 hour human labour = 100kg coal too)” to run the power station.

If humans worked for free or we had slaves (ie value human labour at zero) then wind power would be cheaper because it uses “less resources” but human labour is a resource too roughly equalling 1 hour human labour = 100kg coal.

When you consider that, which anyone living in this reality must do, then you find that wind uses more resources than coal or gas fired stations.

Now that might not always be the case but it is unlikely fossil fuels will increase in price by 400% in real terms so if you want wind hope the manufacturers find a way to reduce prices by 75%.

Rainmaker is right, there are two worlds. The 'real world of physical resources' and the 'fantasy world of fiat money'. Just to make things more complex, there are two real worlds too. The pre 1750 real world based of harvesting the flows of the solar powered biosphere and the post 1750 real world of raiding the geology.

The pre 1750 world was a world of sub 2% growth, with matching expectations for what interest rates should be. When Britain first start raiding the geology, it learnt to grow at 2% on an ongoing basis. On that 2%, we built an empire. I think that a 1% or 1.5% (tops) cash rate is what you should be working with.

It's the raiding of the geology that make that hyperactive 4%-5% look 'tiny' and 'fair'.

I think you need to simplify your outlook because the world is too complicated for you to understand by the looks of it.

Interest is simply me doing work for you today in return for a little bit more work some time down the line.

Would you do me a job, say build me a house and in return I build you a house and a garage in 40 years time?

Would you take that risk? Work your arse off for a year and spend you money to make me a house and in return I build you a similar house plus a garage in 40 years time (0.5% interest)?

What if I die before the 40 years? What if I just don’t honour it? what if I go bankrupt and wipe your liability out? what if we don’t live in houses in 40 years? What if the location we agreed is a ghetto by then?

No one, including you will work for zero and zero interest rates. Not even for 1-2% considering the risk involved.

As for fiat currency, it helps wind farms. How the hell can governments force us to subsidise wind farms without fiat decree?

On top of that the real rate of interest is negative “thanks” to fiat money. So that is an advantage to wind not a disadvantage.

This discussion reminds me of an old online discussion group saying, one which surely dates me as antiquated old skool. It is, very simply DO NOT FEED THE TROLLS. Gosh, a lot of you folks have been around the block a few times, I'd have thought you already knew this. There is a point at which viewpoints are so far apart, and rational discussion impossible, such that engagement leads to circular discussions that just waste everyone's time. Trolls thrive on this, and the quality of the discussion goes down from everyone else's perspective. No names were mentioned in the making of this post.

such that engagement leads to circular discussions that just waste everyone's time.

Well said, 100% agree. Cells (to mention a name) clearly does not understand the premise of TOD. As I mentioned in the comment below, he may have served some small useful purpose in demonstrating an all too common POV that is unaware of the problems facing the planet.

Going forward, I promise to ignore this person. In the interest of reducing clutter I hope others here feel the same.

How many miles per gallon can you get from corn cob cellulosic ethanol fuel, how much does it cost, and how many super tankers can be filled with existing corn cob production?

People were furious when gasoline reached $4.00 a gallon and Congress held hearings. How will they treat people if the cellulosic ethanol fuel mandates must be subsidized and cost over $5.00 a gallon retail before the corn cob refinery employees are paid and the CEO gets a raise on inflated earnings statements excluding one time expensed items and the shareholders get no dividends because the employees and government must be paid instead? New technology unlocks more oil production and the government looks down the long barrel of a gun and asks us to pay more, as if we owe them for all the money they borrowed, expecting a trillion dollars spent today might equal two trillion in savings tomorrow. Am not sure about their investment acumen.

The projected deficit this year is about 1.4 trillion dollars. If emergencies occur the government might go over budget. Obama may have stated he had identified two trillion dollars in spending cuts in his state of the union speech. What was not said was that these projected savings might not cover projected expenses.

I notice from his/her bio that he joined TOD a few hours ago. And, obviously, he is on a mission to represent a POV that is both challenging and annoying to most of the regulars. He certainly annoys me. But, he does remind me of the project team member that voiced objections that I could ignore at my own peril.

Perhaps he is providing a valid service. I think he illustrates the point I've made repeatedly that the vast majority of people in western countries simply do not understand the problem. Ideally, all of his arguments should be categorized and countered systematically - it would make a good primer for helping the average person understand the problems facing humanity and all of our planet.

Cells sounds just like 90% of my neighbors. He is the type of person that we need to turn around (well, he personally, is probably a lost cause) if there is any hope of mitigating the coming "Bottleneck" with a decent "Powerdown" scenario.

If you look at some of his main arguments they run along these lines:

The full cost of coal is in its price. To be frank most people don’t care about some mountain top in a county or province they have never heard of and will never see.
The environmental costs [for coal] for all intents are zero especially when you consider that they are not a cost today.

Like most people, he thinks in terms of paper (fiat) money and current prices as a primary indicator of value - free market kind of thinking. He is pretty much insensitive to environmental issue that affect other people (like downstream from that mountain) and fairly unaware of the more subtle affects (acid rain, mercury, etc) that might affect him.

Sure everyone would like the better quality organic food but most people just wouldn’t be able to afford it. The same is true for renewables vs fossil fuels at today's prices

He equates the depletion of FF with some one's choice of a banana - as if the world we are leaving for future generations is like some kind of yuppie lifestyle choice.

Well you would not pass any accounting exams that’s for sure....Grow up and stop pretending renewables TODAY are price competitive with fossil fuels (bar perhaps hydro)

His thinking is that of an accountant who has not let learned about the cost associated with the "commons". But, this is exactly the same thinking as 95% of all US Corporations.

How can you as an American wish to control prices considering that bedrock of communism is price controls? How about instead of distorting the market and imposing soviet type quotas and limits and price controls we work to get wind/solar cheaper than fossil fuels?

Like many people I know, he is quick to bring up the socialism/communism scarecrows without any consideration for what value these forms of governance may or may not have as we face impending problems.

Don’t get me wrong I would rather have green power but I am realistic enough to know it ant gona happen until the price is comparable. We know they are not currently cost competitive so hopefully they will go down in price to be cost competitive and then provide a good portion of our power instead of a percent or two. I am surprised by the number of people who seem to be opposed to cheaper wind/solar!

And then we have his crown jewel: he is a "realist" that only wants people to understand that the price of wind/solar is the obstacle to a better world without those nasty automobile tailpipes that he does not like.

From my POV, cell fails to appreciate a few things: the nature of the problems facing the planet, the causes of these problems, the kind of goals we need, and the type of solutions that might have some chance of mitigating the consequences of our behaviour - both for us and especially for future generations.

He does not account for the fact that conventional energy supplies are unsustainable for the human population of the planet. He seems unaware that of the damage already done to the oceans and the life therein. Apparently, the rate of species extinction is not a concern. Global warming from the burning of FF seems to escape him. The increase in deserts and decrease in forests does not seem to factor into his thinking. The dramatic increase in autoimmune diseases from toxins in our environment. The starvation and misery already being inflicted upon other countries due to our refusal to consider stop using FF and the attendant CC consequences. I could go on.

The bottom line is that cell's thinking represents what most people think - so it is not very useful to shoot the messenger. He is a reminder for us TOD folks that have moved beyond his mindset some time ago.

What cell lacks is the notion of vision and leadership. If an asteroid is approaching earth and we have some means to deflect it, we would not get into his cost accounting mode - we would do whatever was necessary if it was possibly within our means. Our planet is in drastic overshoot in many ways (not much different than the asteroid threat) and we should try to convince the "cell mentality" about this threat. Only when this awareness is achieved do we have even the slightest chance of implementing all the great solutions debated here on a daily basis.

Wind and solar have only been around for two decades.
Nuclear has been around for 4 decades.
You omit hydro because it actually is a major producer of electricity having been around for a century. There was a time when hydro was considered uneconomical back in the 1930s when the TVA was being built.

So what will be economical when fossil fuels run out and CO2 is taxed?
This is the situation in Europe today and they are turning to wind, solar in a big way.

well if there is a CO2 tax it will have little impact unless the whole world implements it which is highly unlikely to happen.

say Europe and the US implemented a CO2 tax, that would just mean fossil fuels are cheaper for china/india/others and they will use the FF we don’t.

also Europe is not, i repeat NOT embracing wind or solar in a big way. no EU country has even 10% of its power derived from wind or solar.

Overall Europe doesn’t even derive 2% of its power from wind and solar PV.

Europe would much rather find another north sea FF deposit than to build wind farms i can guarantee you that!

as for when fossil fuels run out, that is a stupid argument because we don’t know when that will be other than the fact it isnt going to be very soon.

following your logic we would have gone 80% wind back in the 80s using crap expensive wind technology.

likewise if we went wind power today it will be with crap technology relative to what we will have in 20 years time.

it makes no sense to implement crap technology today for a problem that might occur in 30-40-50-60years perhaps longer.

for all you know 2 decades from now some smart scientist may have found a way to derive lots of power ultra cheaply and cleanly. in your world we would be sitting with ultra expensive wind farms to build and maintain while everyone else used this new source of power.

However I am all for personal choice. If you want solar PV or wind please go out and buy and install it with your own wallet not mine or someone else’s via subsidies or FITs.

The world is heading for a catastrophic energy crunch that could cripple a global economic recovery because most of the major oil fields in the world have passed their peak production, a leading energy economist has warned.

Higher oil prices brought on by a rapid increase in demand and a stagnation, or even decline, in supply could blow any recovery off course, said Dr Fatih Birol, the chief economist at the respected International Energy Agency (IEA) in Paris, which is charged with the task of assessing future energy supplies by OECD countries.

Do I need go on?
Wind doesn’t provide even 10% of any country even in Europe.
Of the Big European nations Germany and Spain do well at 3.5% and 5%.
However they still derive more than 90% of their power from non renewables!

Like I said, wind is a drop in the ocean and will remain so until prices fall considerably.

In the dialect of English spoken by the largest number of native speakers (i.e. not the Queens), power is often synonymous with electricity. A large number of utilities
on this side of the pond) were named [City, State or Region] Power & Light. And all they sold was electricity. No natural gas, coal or oil.

Waste of time - we are talking to past someone who persistantly calls everyone thick because they have moved beyond 'Janet and John do right wing economics' yet keeps using 'Electric' when they mean 'Electricity' - either a troll or a twit but who cares. Mods isn't it time for a ban?

BTW Alan in WWII at least we had the ministry of fuel and power in the UK and I think the usage of power was indeed electricity with fuel being everything else.

And how much of their total power is derived from that source? Electricity is usually only 30% of a countries power requirements. What about transport and heating? Do they power their cars and heat their homes with hydro?

Plus with hydro you either have it or you don’t. What you going to do, pray to the geography god to create the valleys and streams required for hydro power?

If I am wrong why is no country trying to go 80-90% wind? Why is no major country >10% wind powered?
And we are not talking electricity but total power

The price is simply too expensive today

Cell Denmark produces 19% of its electricity from wind and is planing 30% in 2020. A comission is reporting this year too the Danish Parliament this year on how they can become 100% renewable. They are on the right track.

Yes you are right the price is simply too expensive today but I can assure you that it will seem very cheap indeed when we run out of fossil fuels, which we are doing. Markets only give you the price now not in the future, and they are no good at supplying substitute which have a long lead in time. To do that you have to distort the markets to get the new renewable s up and running so they can take up the slack as fossil fuel disappear. This is what Germany Denmark and Spain are doing. When making economic decisions for the future more factors have to be taken into account than just being able to read accounts and making your decision on whether the figures at the bottom are coloured red or black.

Denmark can potentially do it because they have a very large windfall (relative to its population size) of both oil and gas. ie the oil and gas excess can pay for it

For all other countries which do not have this windfall gain from fossil fuels it will be very costly.
Even demark currently gets about 90% of its energy from fossil fuels, Germany is the same!
Stop looking at electricity because we use fossil fuels for more than just electricity.

And I believe you are wrong. fossil fuels will be relatively cheap for a long time to come. I suspect at least 2 decades.

What we need is wind farms to go down in price by 70% not for fossil fuels to go up by 400%. when wind farms go down in price by 70% then we can and will install lots but not until that happens

Reality does not always provide "what we need". And the UK had a MUCH greater windfall from oil, and the free market squandered it.

Denmark cut their oil use in half, and their peak production was about = to their 1973 consumption. All sorts of communist directions have helped keep Denmark as an oil exporter, unlike Thatcher's Britain.

Two decades is about the minimum time required to transition from FF and that assumes all sorts of war time urgency and communist directions and minimal free market response. Figure a half century for free markets to transition (and the 2060 free markets may look a bit like medieval town markets).

It's interesting to compare the supply response to rising oil prices in two periods, first from 2002-2005 and then from 2005-2008. IMO, most developed OECD oil importing countries can look forward to consuming a declining share of a declining volume of global net oil exports, with developing non-OECD oil importing countries consuming an increasing share of a declining volume of global net oil exports.

Here are the average total global crude oil production numbers per day by year, versus average annual US spot crude oil prices (EIA, crude + condensate):

2002: 67.16 mbpd & $26

2003: 69.43 mbpd & $31

2004: 72.48 mbpd & $42

2005: 73.72 mbpd & $57

2006: 73.46 mbpd & $66

2007: 73.00 mbpd & $72

2008: 73.71 mbpd & $100

Relative to the 2002 production level of 67.16 mbpd, in the following three period, 2003-2005 inclusive, the cumulative three year increase in production was 5,164 mb, versus a three year increase in oil prices of $31. So, for every dollar increase in oil prices, three year cumulative global crude oil production increased at 167 mb per dollar, again relative to the 2002 rate.

But then we have the 2006-2008 data.

Relative to the 2005 production rate of 73.72 mbpd, in the following three year period, 2006-2008 inclusive, the cumulative three year decline in production was 632 mb, versus a three increase in oil prices of $43. So, for every dollar increase in oil prices, three year cumulative global crude oil production fell at 15 mb per dollar, again relative to the 2005 rate.

One of the primary contributors to the 2002-2005 increase in production, followed by the 2006-2008 decline was Saudi Arabia, but let’s look at Saudi net oil exports, which are defined in terms of total liquids, inclusive of natural gas liquids and refined products.

Here are the average Saudi net oil export numbers per day by year, versus average annual US spot crude oil prices (EIA, Total Liquids):

2002: 7.1 mbpd & $26

2003: 8.3 mbpd & $31

2004: 8.6 mbpd & $42

2005: 9.1 mbpd & $57

2006: 8.4 mbpd & $66

2007: 8.0 mbpd & $72

2008: 8.4 mbpd & $100

Relative to the 2002 net export rate of 7.1 mbpd, in the following three period, 2003-2005 inclusive, the cumulative three year increase in net exports was 1,716 mb, versus a three year increase in oil prices of $31. So, for every dollar increase in oil prices, three year Saudi cumulative net oil exports increased at 55 mb per dollar, again relative to the 2002 rate.

But then we have the 2006-2008 data.

Relative to the 2005 net export rate of 9.1 mbpd, in the following three year period, 2006-2008 inclusive, the cumulative three year decline in net oil exports was 841 mb, versus a three increase in oil prices of $43. So, for every dollar increase in oil prices, three year Saudi cumulative net oil exports fell at 20 mb per dollar, again relative to the 2005 rate.

Note that in early 2004, the Saudis reiterated their support for the stated OPEC policy of maintaining an oil price band of $22 to $28, and they made good on their promises to support lower prices as they significantly increased net oil exports in the 2003-2005 time frame, but then in early 2006, they started complaining about problems finding buyers for all of their oil, “Even their light/sweet oil,” even as oil prices continued to increase. Apparently no one thought to ask them in early 2006, as oil prices traded over $60 per barrel, why they didn’t offer to sell another two mbpd of oil for $28 per barrel.

The bottom line is that cell's thinking represents what most people think - so it is not very useful to shoot the messenger. He is a reminder for us TOD folks that have moved beyond his mindset some time ago.

Yes, that is an important insight. We should not be complacent in thinking that our view point has much import when confronting the accepted view of the majority. Frustrating as that may be.

I read these posts tonight with great anticipation, as the subject is why we are here. I am dismayed at the tone of the replies and how people allowed cells to bait them to reply.

Build it and they will come, ignore them and they will leave. It isn't what was said today, it is how it was expressed.

When the cost of energy is such that wind/solar is equal to fossil, it will be too late to build the alternatives with a capitalist mindset. The first exploration of discovery for 'the new world' was subsidized. All collective efforts are subsidized in one sense or another. Thank God, for subsidies. Where would we be without our subsidized research, education, transportation, whatever? Big business already runs the show. It isn't always about money or cost benefit analysis.

Would you be in favor of a subsidy for a marginal stripper well that enabled an operator to profit from a well that used more energy to produce a small amount of oil than could be ultimately obtained from the oil produced?

You see the subsidies that he championed. They are an intentional skewing to push our priorities PAST a short term perspective that the markets are limited to. They do have to look way down the road and help us get ourselves where we want to be.

One of the places that "we have wanted to be" is with more production of domestic oil. Stripper well subsidies have been controversial for half a century, as far back as WWII but particularly during the 70's. On occasion they may operate at a net energy loss while still making a small dollar profit.

"..[where] "we have wanted to be" is with more production of domestic oil. "

I don't belong to the same 'we' I guess.

We subsidize education because of the long-term payback it promises. No less would be the benefits of Proper Insulation and Solar Home Heating, for example. But throwing societal resources into a dead end well (if I read your description correctly) which is a loser both near term AND far, and so does nothing to promote energy or financial stability for the USA, does it? If that's the case, then what would justify a subsidy for it?

Guys -- Clue me in: I've been doing this for 34 years and I've never seen an operator of stripper oil wells receive a subsidy. What have I missed?

BTW -- A stripper well isn't a "dead well". It's a low volume producer that nets positive cash flow. Also remember: the average rate (less than 10 bopd) of all U.S. oil wells is below stripper level. Thus without our "dead wells" the U.S. would be importing closer to 100% of our needs instead of the current 60%

Since August heating oil has risen sharply, seasoned wood less so but it is reacting to increased demand. The wood price increase seems to have been a response to a greater installed base of stoves following the 2008 oil price spike.

In cities heating is usually by mains gas, in rural areas it is mainly oil supplemented by wood burning stoves. But with the UK having to import increasing amnounts of fossil fuels, AND having accepted climate change as fact, the plan is to make a substantial move to renewables, up 5 fold in 10 years from 6% to 31%. This alongside a major programme of energy conservation. Windpower will form a massive part of the renewables increase, which is likely to increase further as a percentage of generation with methane from digesters (from agricultutral, farm and domestic waste) linked into the gas grid and coal power stations being equipped to burn miscanthus and short rotation coppice willow, though land may be too scarce to allow a major switch to biomass. Expect more hydro and wave power as well, plus a rebuild of nuclear generation.

The sense that energy is no longer taken for granted is possible best exemplified by the fact that Tesco (the UKs biggest supermarket chain)is currently offering low cost cavity wall and loft insulation installation. Also in the next few days the UK govt will announce feed in tariffs for energy generation.

I'd tend to go along with the premise that cost is the primary influence for consumers, but consider that UK govt is being strongly influenced by environmental impact and long term security of supply. What price dollars if the fuel isnt available and/or you've trashed the environment?

Governments don’t have infinite pockets either, they too are influenced by price.

Hence the reason for the recent outcry from solar providers that their biggest markets, Germany, Spain, France, Italy are cutting their feed in tariffs.

Currently it makes no sense to import Germany wind farms at 10p/kWh instead of importing gas at 1p/kWh

The UK wont even be producing 10% of her power this decade from wind/solar so don’t hold your breath. Germany isn’t even 10% green and look how hard they have pressed to go green. They have something like 10x the wind turbines we do.

Are those figures for kWh delivered to the home or per useful kW? Based on what I pay for electricity, gas and wood I would think they they are the former - if so everything except electricity and the two heat pumps needs to be divided by the efficiency of burning to get the actual cost per useful kW giving something like (efficiencies for the wood burners are a guess, low end of wood and coal is for open fires - not uncommon where I live):

This looks about right compared to what I estimated for replacing my current mains gas with wood to top up with an ASHP with wood and some resistive heating - a cost reduction compared to my present (assumed 70% or less efficient 1985 vintage) gas boiler, about break even with a new condensing one but as my present boiler is a back boiler and cannot be replaced like for like the capital cost of an ASHP is actually lower and installation much less disruptive.

The figures are adjusted for boiler/stove efficiencies to give "true" comparisons between heating using different fuels. e.g. the seasoned wood assumes boiler/stove efficiency of 85%, which is what I'm supposed to be getting with my woodburner! Oil boiler efficiency is assumed at 90%, better than my non-condensing 85% but worse than modern condensing boilers of c95%.

Thanks, for others (will teach me not to follow up sources) the assumed efficiencies in the table are all for modern appliances so at around 90% for most things. The real world fuel consumption given that these are long lived appliances (a friend just bought a house with a 1935 coal boiler still working) could be quite a bit worse than the original list but not as bad as I thought (I think I'm paying rather more for gas than they say though).

I'm surprised wood burners go as high as 85%, not practicable for me to measure but I doubt my simple cast iron cylinder gets even 50%.

Hats off to all of those knowledgeable posters on here who have attempted to engage intelligently with the poster Cells.

However, I have also had the misfortune to have engaged in "debate" with this ideologically driven ignoramus many times on another forum and can reliably inform you it is a complete waste of your time.

Let's see if I get this all, ummm:
Communism, baaad. Organic foods, baaad. Price of fossil fuels will never go up.
We'll never run out of FF. Oh, communism, baaad, again.
Wind power, too expensive and baaad.
Solar power, too expensive and baaad.
We can have energy or Health care, but not both...
Unbridled unregulated kindly Capitalism, goood.
Total reliance on FF, goood.
Having no plans for depletion, goood.
Non-organic, GMO foods, goood.
Oh, and once again, communism, baaad.
Is that it, or did I miss anything about communism and organic foods?

My theory is simply that I and you and everybody else should be able to buy/sell at a price you and I agree on rather than a price someone dictates to us. If you like being dictated to I’m sure you can find many a dictator who will oblige.

I am a regular poster on Housepricecrash.co.uk and can report that his latest brainwave is for us to chuck a few fusion bombs on the moon such that it will light up at night, thus saving earthlings the energy cost of using night lights.

I kid you not.

Seriously, though, I do worry that the full EROEI of renewable energy is not fully factored in when calculating cradle to grave. However, assuming the EROEI is still positive (which I would not question), there is the problem of speed of flow given our biblical levels of energy consumption from the top to the bottom of our global civilization

It seems to me that we have built our entire industrial world on the basis of perpetual access to an incredibly dense and portable energy form. This, in turn has allowed the human population to explode over the last century or so. Maintained, as it is, by indirect and tortuous supply chains of every good and service imaginable.

Renewable energy and, even, nuclear seem at best to be merely forestalling the day when we are forced to address the real elephant in the room. Namely that there are just too damn many of us and until our population drops back to a sustainable level our civilization is at perpetual risk of collapse.

In the end, of course, renewables are the only long term sustainable solution to mankind's energy needs if we want to hold onto the best of the industrial age.

It is hard to push wind past 30% of a grid so assume every country in the world has 30% wind for electric.
Well that would be about 600GWe. That would be equal to about 1,000GWt of natural gas out of 4,000GWt of natural gas production.

Wind would have to make up roughly 100% of electricity to match the power we get from just natural gas.
Do you know any major grid which is more than 20% let alone 100% wind?

Wind in 2030 is quite likely (unless people like yourself gain too much influence) to be > hydro or nuke of 2010. China in particular is doing massive expansions of hydro (82 GW) and nuke as well as wind.

wind may be a lot but only if the price goes down 75% but even then it will only be comparable to nuke/hydro of 2010

assuming prices don’t go down 75% wind come 2030 will not be more than nukes come 2030 and perhaps not even as much as hydro come 2030.

What is for certain is that we will be using more fossil fuels come 2020 than we do today and likely more come 2030 than we do today. I would be surprised if by 2040-50 we use less than we did in 2000 (This is of course assuming governments don’t do something crazy like ban coal)

Wind does not help boil the planet and create (among other side effects) hundreds of trillions in damages that Climate Change will bring (see England without the warm ocean currents, not only can you grow almost nothing, the heating requirements would skyrocket, but even worse, Middle Easterners would dump their London real estate !)

Wind does not depend upon a depleting resource.

Good Net Present Value economics discounts to almost zero anything 31 years or more in the future. Unfortunately, many of us and quite a few of our children will still be here in 31, 32 and even more years. One problem with "capitalism".

Well apart from the fact that claim it change will not boil anywhere (only a few degrees increase) and will have little NET negative impacts. Plus the fact that a lot of places will actually benefit from claim it change which is often not told you need to consider the simple fact that we can not go 90-100% wind/solar even if we wanted to do it!

Wind may not depend on a depleting resource but that helps us how if we cannot afford wind?
It may be the only choice one day but today we can afford fossil fuels so we use that.

As for net present value no it doesn’t mean nothing over 30 years gets built.

Firstly our long term interest rates are about 5% and our long time inflation rate is 3-4% so the real rate of interest is actually about 1-2%.

What that says is an infrastructure project should bring a real return of 1-2% per year or you are better off spending the money on something else. So it isn’t a matter of using the money to build a wind farm or not but it is a matter of using it to build a wind farm or some other infrastructure or some other purpose (education, healthcare, parks, whatever)

NPV assigns almost no value to anything that lasts over 30 years. That is why new construction in the USA is such trash. Only the requirements of building codes (COMMUNISM !) result in any durability at all. I have had a professor of architecture tell me that residential construction is designed to last 20 years (down from 30) before major repairs except where cose requires more expensive materials, building techniques, etc.

During the GWB administration I am trying to think of ANYTHING built for profit that would last (beyond what is required by code) and cannot think of a thing except some railroads adding double track. Although RR construction is also controlled by communist standards (the communists do not like trains derailing, etc.)

Interest rates don’t mean things that don’t last long don’t get built. The only thing it means is that we try to allocate capital to things that return more than 2% pa in real terms.

If a bridge brings in 2% real return pa we will build it to last a thousand years.
You seem to think ignorantly that 100%/2% = 50 years so anything beyond that isn’t build.
No it means anything bringing in a return less than 2% doesn’t get built.
Instead we use the money on something that does bring in 2%.

We don’t live in an infinite resource world as you know. That 2% return is derived from what we have.
The labour and capital we have is enough to build and make things that return 2% or more.
If we had more labour or more capital or more productivity that 2% would reduce.

I understand NPV *VERY* well. I do pro forma's for tax shelters in a prior life as a CPA (chartered accountant to you). I saw how little value was placed on "salvage value" at the end of the term (15 to 20 years were typical).

Bridges are built only by communists (i.e. gov'ts) with longer term POVs than capitalists.

You apparently pulled 2% out of ... after quoting 5% earlier.

Oh well, you are beyond logical argument and facts, I just want to keep others from being mislead by you.

If wind power goes down in price by 80% then we could see wind produce a lot of power. until then it will be a tiny portion. Wind today provides only 0.5% of worldwide power. It is unlikely to provide more than 5-10% for decades.

Most resources are for all intents infinite because we don’t destroy them we just move them about. Take steel as an example. We mine iron ore and turn it into steel. a few hundred years down the line that steel rusts back into iron ore. ie it is recycled. That is the case for most the resources we use.

The only thing that I can say where it doesn’t hold are Fossil fuels. However we have plenty of other energy sources. Most notably that big ball of fire in the sky. I’m sure one day we will be deriving the majority of our power directly from the sun.

However unlike presumably most on this site I don’t think we are close to getting near exhausting the worlds FF supply nor do I believe we are near peak fossil fuels (ie coal plus gas plus oil). We probably have decades of FF remaining and we will likely be burning more of the stuff come 2050 than we did in 2000 (excluding politically influenced decisions like banning coal mining)

I can't believe you guys are still debating this bafoon (going into a third day). He may set a new TOD record for persistant hubris, but his lack of depth and systematic understanding of these issues are telling. CELL has outlived his usefulness. Give it up.

Why don’t you disprove what I have stated instead of whining like a child?

cell, you said (above)

also Europe is not, i repeat NOT embracing wind or solar in a big way.

I suppose it depends on your definition of "big way":

In 2008, more wind power was installed in the EU than any other electricity generating technology. Statistics released by the European Wind Energy Association (EWEA) today show that 36% of all new electricity generating capacity built in the European Union last year was wind energy, exceeding all other technologies including gas, coal and nuclear power*.

In 2009, a total of eight new wind farms consisting of 199 offshore wind turbines, with a combined power generating capacity of 577 MW, were connected to the grid in Europe. This represents a growth rate of 54% compared to the 373 MW installed during 2008. For 2010, the European Wind Energy Association (EWEA) expects the completion of 10 additional European offshore wind farms, adding 1,000 MW and equivalent to market growth of 75% compared to 2009.

Even if we install 50GW of wind capacity per year, which is a lot, it would take 190 years at that rate just to replace our Natural gas consumption!

If you want the math
50GW capacity = 12.5GWe production (25% capacity factor).
12.5 / 0.6 = about 21GW.
That is to say 50GW capacity of wind turbines would displace 21GW of natural gas in a modern gas fired station.

We produce and consume about 4,000 GW of natural gas
4,000 / 21 = 190 years

And that’s before you even consider replacing coal and oil.

We would need to build nearly 250GW capacity per year ever year to replace natural gas by the year 2050.
I don’t see us producing 250GW per year any time soon if ever.

And to replace oil and gas and coal and take into account higher demand from china and India your probably looking at near 1,000GW capacity every year for the next 40 years to replace oil/gas/coal by 2050.

That is a near impossible figure unless wind gets cheaper (which is another way of saying unless we get better at making wind farms)

A number of interesting comments here, though ultimately I think that (at least for a few people) the point about these figures is lost - the bulk of the non-renewable FFs are still cheap compared to the alternative, but given the dynamic of PO, may not be for much longer. Solar pV is expensive in part because it is ascending a technology development curve - 3rd generation pV is about 50% more efficient than 2nd generation pV, and there are indications that some of the 4th generation pV (now just on the horizon) may very well surpass the 32-33% conversion rate that for many years has been seen as the "maximum allowable" efficiency for pV. Similarly wind is expensive because we've not put 100+ years of investment into its development, but next generation turbines are proving to be considerably more efficient at conversion (though access to rare earths, such as molybdenum, may be a limiting factor there). Space based microwave pV stations also look to be increasing overall efficiency of conversion.

The importance of all of these, as well as other renewables, is the very fact that they their energy consumption is an up front cost, and much of that cost is R&D. Once those costs are met, the only costs are maintenance ones. Oil, NG, coal on the other hand have lower startup costs (though keep in mind that much of this is because the R&D costs were effectively paid for over the course of the last century) but then you become reliant upon the suppliers of these fuels as well as upon the resources being available; you also have to incorporate the remediation cost of the environment, something that has become a critical issue now precisely because this accounting was deferred to the public sector (i.e., ignored).

Renewables right now make up a small percentage of total power production (though keep in mind that the push towards renewables has also only been in effect for less than a decade to any significant degree) but to a great extent these are also pilot projects. Denmark's been brought up repeatedly in discussion here, so it's worth looking at why a country that is rich in oil and NG is spending so much money on renewables. The answer, of course, is that the Danes recognize that a time may come in the not too distant future when those resources will decline, either because of the effects of climatic change or because of the North Sea oil and natural gas resources ultimately running out. Thus, the renewables are an insurance policy, a way of insuring that disruptions to their energy supply is minimal.

A second factor in all of these equations is the mutability of energy sources. The US has a heavy reliance upon oil for transportation, and even with a fairly high availability of natural gas, the conversion over to an economy that could run on NG or LNG would be expensive, especially for the agricultural and transportation sectors. That cost would have to be borne primarily by taxpayers, and it would take a while to make happen. That's why BTU costs alone don't tell the whole story.

One final note - keep in mind that consumers in most places have relatively little say about what kinds of power they have available to them. Much of the say is essentially dependent upon both business and government investment into the infrastructures necessary to bring this power to those consumers, and that, in turn is largely a matter of policy. Significantly, when an alternative is offered, especially one that can amortize the increase in costs over a period of time, consumers generally have preferred to go with renewable vs. non-renewable sources for energy generation.

I think the bulk of this argument is about time. Markets are very good at responding to real time conditions of the moment. Markets do not anticipate the future. Free market capitalism (such as it has been) has worked reasonably well in the US during the periods of bountiful resources. When the price of whale oil or wood rose over a significant period of time, we found substitutes. Current prices of various energy sources/carriers reflect well on current motivations. Cells is correct that we are doing what we are doing because of price. This is Robert's point exactly. However, taking the Titanic on the Northern route because it's cheapest and most efficient at the moment may not take us where we need to go. There is a huge iceberg ahead, with most of its body under water, invisible. Markets are not responsive enough to turn the ship away from the iceberg in a timely manner. The Titanic is at the bottom of the ocean I believe.

The antithesis of market capitalism is planning and is odious to free marketeers because planning has usually mucked things up at some point. However, because we have gotten much better at seeing icebergs ahead, it makes sense to plan rather than crash, even if it distorts the markets. We are running out of viable substitutes; we can't simply substitute something for petroleum and coal, yet the economic price does not reflect the possible catastrophic price of continuing on as usual.

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